For example:-Preliminary expenses at the time of formation of new limited companies. Empire Jute co. Vs CIT124 ITR 1 SC Such expenditure is then 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. Manoj Fadnis Member Central Council ICAI AS AS AS AS AS AS Implementation Issues 6 … The sale of scrap ` 1,000 is a capital receipt as it represents sale proceeds of Fixed Asset. 2005-06 Haldia Petrochemicals Ltd. V. JCIT, Rng-12 Kol. Expenditures for developments,improvement and alterations are revenue expenditures but treated as capital expenditure. Deferred Revenue Expenditure: - In some cases, the benefit of a revenue expenditure may be available for period of two or three or even more years. Ans: Production wages is a revenue expenditure. In accounting, the term purchase return specifies a transaction where the buyer of merchandise, inventory or fixed assets returns these defective or unsatisfactory products to the seller. Search. 56. to carryon the business more efficiently and effectively, it is revenue expenses. This amount is to be treated as a deferred revenue expenditure.as the benefit to be derived is not ascertained immediately The amount written off can be challenged by IT Dept stating that it is capital expenditure Posted on 23 Feb 2019 by caglobalindia. The announcement clarifies the treatment of the expenditure incurred on intangible items, which were treated as deferred revenue expenditure and ordinarily spread over a period of 3 to 5 years before AS 26 became mandatory (and also about those which do not meet the definition of an 'asset' as per AS 26). Q: Is production wages revenue or capital expenditure? However, this expenditure does not result in the acquisition of any fixed asset. That is why AO himself allowed the amount debited in the profit and loss account. These expenditures are not immediately written off in the year of actual expenditure but split over a period of certain years as per the decisions and policies of the management. Posts about ind as icai written by caglobalindia. Visit Our Book Store To Buy our Publications . About; Nest Education; Tag Archives: ind as icai Problems & Solutions on Ind AS- Preview version. lock #1 Introduction. Heavy advertisement expenses. capital expenditure • revenue nature : Bot Summary: The said deferred expenses would be amortized over five years from financial year 2006-07. lock. CA CPT students definitely take this CA - CPT ICAI Model Test Paper - 2 exercise for a better result in the exam. Skip to primary content. 27) What is the meaning of purchase return in accounting? CIT(A) assessee has claimed the deferred revenue expenditure as per the Guidance Note issued by ICAI on expenditure incurred during construction period. Before Ld. Audit of impersonal ledger - Capital expenditure, deferred revenue expenditure and revenue expenditure, Outstanding expenses and income, Repairs and renewals, Distinction between reserves and provisions, Implications of change in the basis of accounting. … Deferred Revenue Expenditure is a fictitious asset: Although it appears on the assets side of the Balance Sheet, it is not really an asset to the business. Skip to secondary content. #9 General doubt illustration 9 of icai book (Watch after treatment of JLP) lock #10 Self assessment test. In a number of judgements viz. of revenue or expense as recognized in the statement of profit and loss and the corresponding amountwhich is recognized forthecomputationoftaxable income. (a) State with reasons whether the following are Capital Expenditure or Revenue Expenditure: (i) Expenses incurred in connection with obtaining a licence for starting the factory were ` 10,000. For example, goodwill, rights, deferred revenue expenditure, miscellaneous expenses, preliminary expenses, etc., are examples of fictitious assets. Section - A Q2. voluntary retirement expenditure as a transitional measure in the revised AS 15, ‘Employee Benefits’. MCQ's test-2. 7 3. It is a recurring expenditure that occurs fairly frequently. that expenditure incurred on factory license fees, trade mark fee, seed marketing expenses, public/capital issue expenses, preliminary expenses and rental paid for pre-commencement of retail stores, factories has been treated as deferred revenue expenditure which are being amortised over the life of the concerned items. In other words, for accounting purposes, the concept of ‘deferred revenue expenditure’ has ceased to exist unless otherwise specified in standard, e.g. It will be easier to understand the meaning of deferred revenue expenditure, if you know the word deferred,which means “Holding something back for a later time”. Heavy Research and development expenses. Capital /Revenue and Deferred Expenditure Deferred Revenue Expenditure : The characteristics of Deferred Revenue Expenditure is as under :1 It is Revenue in nature.2 The benefit of the expenses does not expire in the same accounting year, but is spread over more than one year, normally 3 to 5 years.3 The period for which the expediture would provide benefit cannot be precisely … Also be treated as capital expenditure as Implementation Issues 6 when: asset is brought its! Amity University are not consumed within the same accounting period recognised as asset. 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