Hi all
Can Advertisement Expenditure be capitalized as Deferred Revenue expenditure. Pls Explain Me with reference to AS 26 & any other relevent Guidance Notes/Accounting Standard.
2 Replies
Ramya
(Student)
(65 Points)
Replied 12 September 2009
In some cases, the benefit of a revenue expenditure may be available for period of two or three or even more years. Such expenditure is then known as "Deferred Revenue Expenditure" and is written off over a period of a few 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 advertising campaign will last quite a few years. It will be better to write off the expenditure in there or four and not in the first year.
Ramya
(Student)
(65 Points)
Replied 12 September 2009
Noted the words "unless deferred", used in the Accounting Policies, if the company was treating certain revenue expenditureon R & D as deferred revenue expenditure which was not permissible under AS 26. AS per AS 26 an expenditure regarding research should be expensed immediately in the account.
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