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## Deferred Revenue Expenditure There are certain expenses which are primarily revenue in nature, the benefit from being not exhausted during the year in which it is incurred. Such expenses are called “**Deferred Revenue Expenditure**”. The term refers to those revenue expenses the writing off of w...

## Deferred Revenue Expenditure There are certain expenses which are primarily revenue in nature, the benefit from being not exhausted during the year in which it is incurred. Such expenses are called “**Deferred Revenue Expenditure**”. The term refers to those revenue expenses the writing off of which is deferred to more than one year. Such expenses are carried forward written off over the period during which the business is likely to benefit the same. Revenue expenditure written off over more than one year can be categorized as: - **Expenses which are wholly paid in advance and which the services/benefits are to be received in future. e.g., prepaid insurance, prepaid rent, advance salaries.** - **Those expenses the benefit of which is partly received during the year under consideration and partly in subsequent year(s). e.g., expenditure incurred in an advertising campaign introducing a new product. A part of this expenditure will be charged against profit of the year, and the balance will be carried forward shown in the balance sheet, for write off in subsequent years.** - **Expenses which are incurred very rarely. Such expenses are incurred in the normal routine carrying on of the business. Illustrations such expenses are developmental expenditure like market survey, experiments, expenses on issue of shares and debentures, discount issue of shares or debentures. Proper accounting necessitates that these not treated as expenses for the year in which they are incurred, but spread over a number of years. Such expenses are the real "deferred revenue expenses". These expenses do not create any asset or infrastructure. Hence, they are not "capital expenditure". Simultaneously they are not normal day to day expenses of the year which can be absorbed against the revenue of one year.**