In addition, this publication supersedes all previously issued editions. Deferred revenue recognition will happen as soon as the service is provided. Payment made for technical assistance and access to the fruits of continuing research [C.I. But its matching with revenue may be deferred considering the benefits to be accrued in future. Accounting for sales tax exemption benefit under Ind AS. T.R. Journal Entry for Deferred … 18: Revenue recognition in case of project managers. and Capital Expenditure comprises of investing in machinery and equipment’s. Is deferred revenue a liability? In detail Facts The taxpayer, M/s Fine Jewellery (India) Ltd.1, was engaged in the business of manufacturing and exporting jewellery and incurred certain recurring expenditure on ‘brand building’. A deferred expenditure is placed on the balance sheet as an asset, since it is something that has been paid a certain amount for, but has not yet been used in its entirety. Brokerage and underwriting Commission on the issue of securities. Purchase of furniture for rupees 100000 is deferred revenue 4. 692 (S. C.)]. 17: Disclosure of ‘buyer’s credit’ and ‘supplier’s credit’. Payments made for use of quota rights, or for use of patents and trade marks. In view of that, the referred expenditure has to be expensed out in the year of occurrence itself. INDIAN ACCOUNTING STANDARDS -Ms. Fleur Dsouza Asst. The payment the company … In the above example, the maintenance contract costs 12,000 for 1 year, assuming the business produces monthly management accounts, each month 1,000 will be become recognized revenue and credited to the services revenue account in the income statement with the following journal entry . Some are considered current assets, if they are used fully within a year. revenue expenditure is that from which the organization derives benefit only for a period of one year and it only helps in maintaining the earning capacity of the business. but the yearly profit is only400000 on an average basis. Deferred Revenue Expenditure: ADVERTISEMENTS: In some cases, the benefit of a revenue expenditure may be available for a period of two or three or even more years. Such expenditure is known as deferred revenue expenditure and is written off over a period of a few years and not wholly in the year in which it is incurred. Query No. Major differences between US GAAP and Indian GAAP Underlying assumptions Format/ Presentation of financial statements Cash flow statement Depreciation Long ter… These expenditure does not result in an asset creation. DEFERRED EXPENDITURE. Expenditure incurred on the maintenance of business reputation. An expenditure that neither creates assets nor reduces a liability is categorised as revenue expenditure. Save . Insurance . Revenue Expenditure and Capital Expenditure of India! This is the basis of classification between revenue expenditure and capital expenditure. Query No. 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. (a) Brought 45,000 in cas … The Deferred revenue expenditure includes: Heavy expenditure on advertisement and publicity for introducing. If it creates an asset or reduces a liability, it is categorised as capital expenditure. For … Since there is no concept of deferred revenue expenditure in the Act, Assessee claimed deduction for the whole amount of such expenditure within the year itself through his letter dated 26th December, 2001. Deferred Revenue expenditure are usually large in amount and benefits are not consumed within the same accounting period. The impact of this observation would be that taxpayers would have an option, going forward, in respect of deferred revenue expense (which is otherwise allowable as a revenue expenditure). IND AS 18 Revenue Recognition sets the guidelines as to when to recognize the revenue arising from certain types of transactions and the accounting treatment of the same. Query No. The difference between total revenue and total expenditure of the government is termed as fiscal deficit. New product preliminary expenses. ... the expenditure incurred during this period is also sometimes treated as deferred revenue expenditure to be amortised over a period not exceeding 3 to 5 years 19. Part of the amount is shown in profit and loss account and is reduced from total expenditure and rest is shown in balance sheet. Plan and Non Plan Expenditure of Government of India has been been replaced with new classification known as Capital and Revenue expenditure after dismantling Planning Commission. 21 This money has not been earned and thus can’t be reported on the income statement. Revenue Expenditure mainly comprises of military pays and allowances, etc. The basis of classification between revenue expenditure: Indian accounting STANDARDS -Ms. Fleur Asst! Creation of assets, an enterprise can not recognize any expenditure as deferred revenue expenditure is to... They are used fully within a year this money has not been earned and thus can t... Is termed as fiscal deficit, intangible assets, if they are used fully within a year pace! Are not included ‘ supplier ’ s credit ’ and ‘ supplier ’ s credit.. Reduces a liability and not an asset case of project managers expenditure comprises of investing in machinery and ’... 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