Capital income is income generated by an asset over time, rather than from work done using the asset, according to Investopedia. If a farmer buys land for a certain amount of money and sells it at a profit after one year, the difference in the prices is capital income
Income is the increase in economic benefits in the form of the following:
- Increases of assets that lead to increases of equity other than contributions by the shareholders in their capacity as a shareholder.
- Decreases of liabilities that lead to increases of equity other than distributions to the shareholders in their capacity as shareholders.
Characteristics of Revenue Income:
- It is not earned frequently
- It is derived from the sale of non-current assets such as property, plant and equipment and investments that are not held for sales in the ordinary course of business
- The amount involved is very significant
- It is normally presented as other income rather than income from operating activities or investment income