Deferred revenue expenditure
An expenditure, which is revenue expenditure in nature, the benefit of which is to be derived over a subsequent period or periods is known as deferred revenue expenditure. The benefit usually accrues for a period of two or more years. It is for the time being, deferred from being charged against income. It is charged against income over a period of certain years.
Following are the features of deferred revenue expenditure:
· It is a revenue expenditure, the benefit of which is to be derived over a subsequent period or periods.
· It is not fully written off in the year of actual expenditure. It is written off over a period of certain years.
· The balance available after writing off (i.e., Actual expenditure - Amount written off) is shown on the assets side balance sheet.
· Considerable amount spent on advertising
· Major repairs to plant and machinery