Miscellaneous Expenditure Accounting Treatment

A/c entries 7457 views 2 replies

Vishal Mehta

Chartered Accounatnt

71 Points Posted on 17 May 2011

Hello

Company A had incurred expenditure on Advertisement which as per their accounting policy are writting off through Profit and Loss Account over a period of 5 years. i.e Deferred Revenue Expenditure and showing the unamortised amount under the head Miscellaneous Expenditure.

However the company wants to change its policy on the same and want to write off the balance deffered revenue expenditure in books till date through General Reserve instead of debiting annual write off to Profit and Loss Account

The same being adopted due to change in presentation of Miscellaneous Expenditure in Revised Schedule VI applicable from 01.04.2011.

Please advice with the help of necessary provisions and guidelines whether the above changed policy can be adopted by the company or not.

Hope to receive an early reply.

Replies (2)

vikas

ca final

44 Points Posted on 17 May 2011

this case is based on the " change in the accounting policies'' AS 1, yes the compnay can do it subject to the compliance with the conditions in this respect if the company is making any change in its accounting policy then it should disclose this fact in the notes to account and effect of the old policy policy and new policy should be charged to p/l ac.

rgds

vikas

ca final

prerna

student

91 Points Posted on 07 June 2011

sir as per AS 26 , THERE IS NO LONGER ANY CONCEPT OF D-R-E , in the first year itself it will be charged to pl a/c, further companies act provides that all income and exp should be routed through pl a/c and not g.reserve a/c