What is deferred revenue expenditure ?
What is deferred revenue expenditure ?
Now there are some expenditures which are basically revenue in nature but their benefit is available for a long time. E.g. advertisement expense.
Suppose a firm spends Rs.3 lakh for advertisement. Advertising is actually a revenue expense as it does not generate any specific asset, but the amount is huge and the benefit received from such expense is for long term (as it will increase sales not just for 1 year)
Hence such an expense is called a 'Deferred Revenue Expenditure'
It will be shown in the balance sheet of the firm and will be written off over a period of few years. It is a fictitious asset i.e. it does not really exist but still gives benefit for a few years.
