deferred revenue expentuure journal enteries
This query is : Resolved
12 October 2009
Hi
what is deferred expenditure and if company spend 200000 on deferred expendture and want to write of with 4 years what would be journal enteries every years. Please tell me
Monia
what is deferred expenditure and if company spend 200000 on deferred expendture and want to write of with 4 years what would be journal enteries every years. Please tell me
Monia
12 October 2009
The Expenditure which has been incurred in an accounting period but it is applicable further periods also.
Ex. Advertisement Cost
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.
Ex. Advertisement Cost
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.
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12 October 2009
no such kind of expenditure will be deferred after new AS26 & only exp which constitutes as Intangible assets will be recognized & amortized.
13 October 2009
Deferred revenue expenditure concept is no more in existence as per AS 26. The expenditure has to be fully charged to P&L in the first year itself.
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