Dear CCI friends plz provide reason for these bits.
1. Underwriting Commission paid for issue of shares is ......... in nature ( Ans: Deferred Revenue Expenditure )
2. What is the difference between the Deferred Revenue Expenditure & Prepaid Expenditure ?
a) Accounting Treatement b) Nature of Expenditure c) Estimation of amount d) Benifit for more than accounting perion
( Ans: C )
1) We get the Underwriting commission benefit for more than 1 year.. since the deferred revenue exp are those which benefit us for more than one year..... Underwriting comsn is normally a huge amt.. we dont transfer the full amt to P&L in the first year...
suppose the co will get benefit for 4 years than the comsn will be deferred for 4 years...
due to Underwriting co gets a benefit only, bcz if thr was no underwriting co could not have sold all the share to public... minimum req is 90%.... Hence it is DRE
the amt of comsn that will remain after transferring to P&L will be shown in B/S
But i didnt get ur scnd que.. Plz clarify it
and i hope u got what u must be expecting
CAclubindia
