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Accounting For Managers - Revenue Recognition

Deferred Revenue Expenditure

   Posted On :  26.01.2018 06:32 am

A heavy expenditure of revenue nature incurred for getting benefit over a number of years is classified as deferred revenue expenditure.

In some cases the benefit of revenue expenditure may be available for a period of two or three or even more years. Such expenditure is to be written off over a period of two or three years and not wholly in the year in which it is incurred. For example a new firm may advertise very heavily in the beginning to capture a position in the market. The benefit of this advertisement campaign will last quite a few years. It will be better to write off the expenditure in three or four years and not only in the first year. Some other examples of deferred revenue expenditure are preliminary expenses, brokerage on issue of shares and debentures, exceptional repairs, discount on issue of shares or debentures, expenses incurred in removing the business to more convenient premises and so on.

Tags : Accounting For Managers - Revenue Recognition
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