Accounting · Deferred Revenue Expenditure
An enterprise spends Rs. 15,00,000 on a massive advertisement campaign launched during the introduction of a revolutionary new product. The management expects that the benefits of this campaign will be felt over the next five years. For the first financial year, what is the appropriate accounting treatment for this expenditure if the company follows the concept of matching costs with revenue?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Charge Rs. 15,00,000 to the Profit and Loss Account in the first year
- 2Show Rs. 15,00,000 as a Fixed Asset in the Balance Sheet
- 3Charge Rs. 3,00,000 to the Profit and Loss Account and show Rs. 12,00,000 as Deferred Revenue Expenditure✓
- 4Charge Rs. 15,00,000 directly to the Capital Reserve account
Correct answer
Charge Rs. 3,00,000 to the Profit and Loss Account and show Rs. 12,00,000 as Deferred Revenue Expenditure
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