120000/- is paid to an accountant who is a not having any professional degree whether TDS is require to deduct and if … It should be noted that As per Para 56 of AS-26 “Intangible Assets” issued by ICAI, Deferred Revenue Expenditure is not allowed in Balance Sheet. Click on the links below to access. AS-26 “Intangible Assets” has diluted the concept of deferred revenue expenditure. Deferred expenses, also known as deferred charges, fall in the long-term asset category. What is Deferred Revenue Expenditure? Financial Statements - I 335 9.2.2 Receipts The similar treatment is given to the receipts of the business. Ex-Advertising Expense for the launch of a new product will provide benefit for … It is not open for the AO to treat an expenditure as party revenue in nature and balance 25% as deferred revenue expenditure. A Master Software Licence and Services Agreement was also entered into with Oracle. Facts of the Case The assessee treated this expenditure as deferred revenue expenditure in its books of accounts and amortized Rs.2,40,000/- by debiting the same to the Profit and Loss Account of the relevant previous year. The assessee incurred expenditure of Rs. ... Bank / Insurance / Stock / Debtors Audit, Internal Audit, Code of Ethics, ICAI, Miscellaneous, Valuations Answers Posted : 6706. Let us take an example. In terms of the AS 22- Accounting for taxes on income issued by the ICAI, the Company has adjusted the deferred tax liability for the period up to March 31, 2001 amounting to Rs. Expenditure on ERP Software allowed as Revenue in nature despite being treated as deferred revenue expenditure in the books of accounts. Accounting treatment for VRS expenditure redefined. Archives - Recent Opinions of The Expert Advisory Committee. Following the prudent accounting norms and as per the guidance note of ICAI, the company claimed these expenditure as deferred revenue expenditure and also following the principles established by the Hon'ble Supreme Court in the case of Madras Industrial Investment Corporation Ltd. v. CIT, (1997) 225 ITR 802. • Start-up and pre -operating costs are not capitalised as part of the cost of property, plant and equipment unless those costs are necessary to bring the asset to its working condition examples of costs that can be capitalized include expenditure on test runs. Freight paid on purchase of machinery is to be treated as Revenue Expenditure … ... only a part of an item of expenditure, the disallowed amount would result in a permanent difference. • IND AS 115 deferred, in line with global developments and IASB’s decision to defer IFRS 15 ... • Deferred Expenditure ... Revenue-based amortization for tollassets Unlike IFRS, IND AS permits revenue … Parth from India Parth! 7. E-mail address: foundation_examhelpline@icai.in Please fill up the form early to avoid any unforeseen issues. 20,000 for addition to double the output, (ii) Rs. ... ICAI … Current tax is the amount of income tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period. New Delhi, Oct. 26: The Institute of Chartered Accountants of India (ICAI) is going to issue an announcement on the applicability of the accounting standard (AS) 26, pertaining to intangible assets, to include the expenditure on Voluntary Retirement Scheme (VRS). treated as a deferred revenue expenditure to be amortised over a period of 3-5 years. Sir If Accounting charges of Rs. The treatment of deferred revenue expenditure is same as of capital expenditure. New Delhi, Oct. 26: The Institute of Chartered Accountants of India (ICAI) is going to issue an announcement on the applicability of the accounting standard (AS) 26, pertaining to intangible assets, to include the expenditure on Voluntary Retirement Scheme (VRS). IFRS 15 Revenue from Contracts with Customers and FASB issued ASU 2014-09 with the same title. This is also referred to as Deferred Expenditure. submitted even to an outside agency, e.g., to a credit agency ... ICAI REVIEW OF DEFERRED TAX ASSETS 19 Deferred Revenue Expenditure. Deferred revenue expenditure; None of the above; Answer Question 63: Sold Government Bonds ` 30,000. जब भी Deferred Revenue Expenditure की बात होती है तो Advertisement का Example बहुत ही common है। आइये हम भी Advertisement के Example के through अपने आज के Concept को और अच्छे से समझते है. The organization derives benefit from such expenditure for a long-term. A portion of the total deferred revenue expenditure is charged as revenue expenditure. Treatment of subsequent expenditure on fixed asset as deferred revenue expenditure – whether appropriate 10 4. 1.36 crores & Rs. Deferred revenue expenditure should be written off over a certain number of years. 2. Import duty of raw material purchased is a (A) Revenue Expenditure (B) Capital Expenditure (C) Deferred Revenue Expenditure (D) None of … 1.70 crores in AY 1997-98 & 1998-99. The key difference between a CA and a CS are: A CA can apply for jobs in the fields of auditing, accounting, taxation, consultancy, and management accounting, whereas a CS can apply for jobs as legal experts, strategic managers, corporate planners, executive secretaries, and chief advisors. a. ♦ The Guidance Note on Terms used in Financial Statement’, issued by the Institute of Chartered Accountants of India, defines “deferred revenue expenditure as those expenditure” “for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods,” Deferred revenue expenditure; None of the above; Answer Question 63: Sold Government Bonds ` 30,000. Query No. 2015-16. Deferred Revenue Expenditure/ Deferred Marketing Expenditure. 32,000 has been spent on a machine as follows: (i) Rs. Deferred Revenue Expenditure is an expenditure which is revenue in nature and incurred during an accounting period, but its benefits are to be derived in multiple future accounting periods. Underwriting Commission is the commission paid by the company to the underwriter for underwriting company's Shares ? 6. Deferred expenses, also known as deferred charges, fall in the long-term asset category. Capital expenditure. What should I do? 4.05 Deferred Expenditure Deferred Revenue Expenditure Expenditure for which payment has been made or a liability incurred but which is carried forward on the presumption that it will be of benefit over a subsequent period or periods. 2 Objective Comments: The objectives may be broken down into parts for realizing the importance instead of a running Para [ as below: determine whether a tax is an income tax identify the assets and liabilities that would be expected to affect taxable profit if they were recovered or settled for their present carrying amounts All these expenses are revenue nature but due to huge amount, we get its benefits more than one year. A truck was purchased and after sometime, the name of the company was painted on it for advertisement purpose for Rs.1,000/- this is : 1. Deferred Revenue Expenditure. Ans: Deferred Revenue Expenditure: Expenditures which are of revenue in nature and incurred during one accounting period but its benefits are expected to be derived over a number of years, such expenditures are called deferred revenue expenditure. As a company delivers services or products, deferred revenue is gradually recognized on the income statement to the extent the revenue is earned. Indian GAAP primarily comprises 18 accounting standards (AS) issued by the Institute of Chartered Accountants of India (ICAI). Capital expenditures are shown in the (A) Balance Sheet (B) Profit & Loss a/c (C) Trading a/c (D) Manufacturing a/c 33. Classification of Deferred Revenue Expenditure. Expenses partly paid in advance: It is when the firm derives a portion of the benefit in the current accounting year and will reap the balance in the future years. Thus, it shows the balance of the benefit that it will reap in future on the Assets of the Balance Sheet. According to the Accounting Standard by ICAI, inventories should be valued at (a) Cost (b) Realisable Value (c) The lower of cost or net realizable value (d) Retail price ... c. Deferred Revenue expenditure d. None of the above 55. It was held that even if such request for special audit has been squashed, benefit of explanation 1 to section 158BE(2) is available i.e. Purchase of machinery for sale is revenue expenditure (TRUE) 4. Deferred revenue expenditure refers to the expenditure which is revenue in nature but involves a lump sum amount and the benefits that extend for a period of more than one year. Published by : The Publication Department on behalf of the Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. ICAI - The Institute of Chartered Accountants of India. It treated the sum of Rs 3 crore as deferred revenue expenditure to be written over seven years. Tax expense (tax saving) is the aggregate of current tax and deferred tax charged or credited to the statement of profit and loss for the period. • Start-up and pre-operating costs are not capitalised as part of the cost of property, plant and equipment unless those costs are necessary to bring the asset to its working condition examples of costs that can be capitalized include expenditure on test runs. Pre operative Expenses : The main advantage of the study material is to provide help to the students to get knowledge and skills in the particular subject. 2. 17. 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. - Recent Opinions of the balance of the three, however, only the standards are in. And decrease in capital an item of expenditure, the assessee incurred an of! 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