Paramesh S (Finance Manager) (205 Points)
29 March 2013Hi friends,
I had doubt regarding advertisement expenses, actually my company incorporated 5 years back ( company is textiles company) and this year we are started 2 branch & we spended 2.5 cores as advertisement expenses. My question is ,,,
1) Is there was any need to book my expenditure as revenue expenditure ???
2) If it was deferred revenue , in howmany years it can be writte-off ???
3)There is any parameters to measure the life of deferred revenue expenses.?????
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 29 March 2013
Expenditure whihc is initially of reveneu in nature but if future economic benefits are expected to flow from such expendituer , then such expenditure needs to be deferred.
Such deferred revenue exp shud be amortized on a prudent basis depending upon the period of the economic benefits that are xpected to flow to teh enterprize from such exp. Normally the expenditure shud be amortized within a period of 5 years.
However subsequently if it is found that no economic benefits are expected to flow from such exp then the balance remaining shud be immediately w/o to P&L.
Paramesh S
(Finance Manager)
(205 Points)
Replied 29 March 2013
Yes, i agreed with your views, but my worry about AS 26, there it state that expenditure provides future economic benefits, but no tangible asset or other asset should recognized as expenses when it was incurred. So can you tell me, is there any AS or COMPANY LAW provision describing about deferred reveune expenditure....???
pp govind
( General Manager(Fin))
(35 Points)
Replied 31 March 2013
Now there is no concept of defered revenue expenditure. It has to be charged to profit &Loss a/c in the year of incurrence.
CAclubindia
