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Examples, Features | Accountancy - Deferred revenue expenditure | 11th Accountancy : Capital and Revenue Transactions

Chapter: 11th Accountancy : Capital and Revenue Transactions

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.

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.

 

Features of deferred revenue expenditure

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.

 

Examples

·           Considerable amount spent on advertising

 

·           Major repairs to plant and machinery

 

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11th Accountancy : Capital and Revenue Transactions : Deferred revenue expenditure | Examples, Features | Accountancy


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