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What is the treatment for 'DEFERRED REVENUE EXPENDITURE'?
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Answer Posted / dave
first of all,defered revenue expenditure is an expenditure
of revenue nature whose benefits are availed for more than
one accounting period. the expenditure had been incurred in
a particular year but its benefits will be enjoyed not only
in that year but also in years to come. so the cost
(expenditure) is capitalised and spread over the years in
which the benefits will be enjoyed. for example, R & D
costs 50,000 naira for the beenfit of 5 years.thus, 10,000
naira would be charge to P & L account every year till the
end of the 5th year.in the balance sheet, it is a current
asset item ( you can viewed it as prepaid expenditure, i
mean u treat it like the way u do to prepayments.)
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