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What is the treatment for 'DEFERRED REVENUE EXPENDITURE'?
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Answer / abraham ninan
Defered Revenu Expenditure Is An An Expenditure its
Benefits is Extend to Succeding Year or Future.Heavy
Advertisement cost, Initial Stage Consulting Fees, New
Company Operating Time Initial Stage Techniqueal Adviser
Fees, this Cost Is Write off Portion In an Year And Year
| Is This Answer Correct ? | 10 Yes | 1 No |
Answer / muralidhar barkur
Another exmple would be research and development expenses
whose benefit is spread over more than one year.
| Is This Answer Correct ? | 9 Yes | 1 No |
Answer / vishal rana
Treatment of Deffered Revenue Expenditure :-
Example : - If we incurred Rs. 2,00,000/- expenses for the
developement of New Product during the F.Y. 2009-10. & We
Presume that the benefit of which we have received upto 5
years than
During 1st year (i.e. F.Y. 2009-10) we charged Rs. 40,000/-
as an expenses for the year and debited to Profit & Loss
Account & remaining balance i.e. Rs. 1,60,000/- we shown
under the head MISCELLANEOUS EXPENDITURE (To the Extent of
not W/off) on Asset Side.
| Is This Answer Correct ? | 8 Yes | 0 No |
Answer / reena
It is a heavy expenditure of revenue which is incurred for
getting benefits over no. of years.
Eg: advertising
| Is This Answer Correct ? | 6 Yes | 0 No |
Answer / dave
first of all,defered revenue expenditure is an expenditure
of revenue nature whose benefits are availed for more than
one accounting period. the expenditure had been incurred in
a particular year but its benefits will be enjoyed not only
in that year but also in years to come. so the cost
(expenditure) is capitalised and spread over the years in
which the benefits will be enjoyed. for example, R & D
costs 50,000 naira for the beenfit of 5 years.thus, 10,000
naira would be charge to P & L account every year till the
end of the 5th year.in the balance sheet, it is a current
asset item ( you can viewed it as prepaid expenditure, i
mean u treat it like the way u do to prepayments.)
| Is This Answer Correct ? | 8 Yes | 3 No |
Answer / dayakar
can any one give example other than advertisement expenditure
| Is This Answer Correct ? | 5 Yes | 2 No |
Answer / anup
expenditure incured in current year , the benefit of which
organisation will get for more than one year. So,
expenditure also to be defered and proprtionately to be
charged to P & L on the basis of no of years for which
organisation is getting benefit.
| Is This Answer Correct ? | 4 Yes | 1 No |
Answer / sreepad
Yes, Deferred Revenue expenditure is an expenditure which gives benefits for more than one year. So, we have to proportionate the expense to several years.
Example : Sachin's Advertisement contract for Adidas for 4yrs is 20 crores, for which he will participate in all promotional events for the firm.
the deferred period will be 4 years. 5crores for each year if we proportionate equally.
But, I have one question - how can we define the benefits for each year?
Do we proportionate the benefit as per the revenue generated by the expenditure or do we have any set of rules/calculation methods/theories to define this?
The proportionate expense is taken in the P&L account for the first year and where will we show the remaining expense?
what are the Journal entries?
People please share your knowledge & thoughts.
| Is This Answer Correct ? | 3 Yes | 0 No |
Answer / d s ray
Deferred revenue expenditure should be treated as
expenditure of the period in which the same has been
incurred althrough the benefit form it is likely to accrue
in the future years. Example is heavy advertisement expenditure.
| Is This Answer Correct ? | 3 Yes | 0 No |
Answer / uzair sofi
deferred revenue expenditure by which we mean that revenue expenditure having charecteristics of capital expenditure.in simple terms expenditure whose benefit has been derrived within a year & balance not yet used.e.g.heavy expenditure on advertisement.2.prepaid rent(benefit continues)3.discount on issue of shares & debentures.
| Is This Answer Correct ? | 3 Yes | 0 No |
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