nkamuni_mca

 Profile Answers by nkamuni_mca Questions by nkamuni_mca

• Sep 21st, 2009

 

• The nature of some expenses is such that though they do not create an asset
but their benefit is spread over more than one accounting period.
• These are mostly non-recurring and large in amount.
• In such circumstances instead of debiting the entire amount of these expenses
to Profit and Loss of the year, it may be spread over a number of years with a
proportionate amount being charged each year to P&L Account.
• The portion that is still not charged to Profit and Loss is shown in the
balance sheet on the asset side after Capital Work in Progress and is called
Deferred Expenditure.
• Examples are Expenses incurred to start a business, Initial marketing cost to
launch a product etc.

sivareddy.bommu

 Profile Answers by sivareddy.bommu 

• Oct 13th, 2009

 

An Expenditure is incurred within one financial year, But Getting the benefits over the Number of Years is called the Deferred Revenue Expenditure.

Heavy Advertisement Expenditure, Business Promotion Expenditure.

ramsrch

 Profile Answers by ramsrch 

• Jun 25th, 2010

 

Deferred Revenue Expenditure is an expenditure which is spread to different financial years as the expenditure that is incurred is huge in amount.  The expenditure will be claimed on a pro rata basis for each year until the amount is completely written off.
Ex: Investments on capital projects which involves huge investment can be deferred to a consecutive accounting or financial years to claim the expenditure.