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Expense related to next accounting year

Accountancy

In which year (current or next accounting year) the expense related to the sale of next year is recorded Like if a company advertise for its products which is to be launched next year?

Atharv Sankliya

CA Final

★ 3K+

27-May-23 13:59

462

Answers (10)

I think the deferred revenue expenditure concept is no longer applicable. So, the expenditure has to be recorded in the same year in which it has been incurred.

Varshaa M

CA Final

★ 35K+

27-May-23 17:37

Varshaa M

I think the deferred revenue expenditure concept is no longer applicable. So, the expenditure has to be recorded in the same year in which it has been incurred.

But it is related to next year

Thread Starter

Atharv Sankliya

CA Final

★ 3K+

27-May-23 17:38

Advertisement expenditure cannot be recognised as an asset. It does not create an identifiable intangible asset and has to be written off as per AS 26/Ind AS 38

CA Suraj Lakhotia

Admin

27-May-23 17:43

CA Suraj Lakhotia Admin

Advertisement expenditure cannot be recognised as an asset. It does not create an identifiable intangible asset and has to be written off as per AS 26/Ind AS 38

Not prepaid expense ?

Thread Starter

Atharv Sankliya

CA Final

★ 3K+

27-May-23 17:44

Prepaid is if you have taken advertisement for say 6 months out of which 2 months is in next period. But if you have already done the advertisement, then you cannot recognise it as a prepaid expense.

CA Suraj Lakhotia

Admin

27-May-23 17:48

CA Suraj Lakhotia Admin

Prepaid is if you have taken advertisement for say 6 months out of which 2 months is in next period. But if you have already done the advertisement, then you cannot recognise it as a prepaid expense.

But sir can you explain why it is not recognize as prepaid expense as it's benefit is derived by business in next accounting year

Thread Starter

Atharv Sankliya

CA Final

★ 3K+

27-May-23 17:51

Because you would not know how much benefit you would get in next year.

CA Suraj Lakhotia

Admin

27-May-23 17:52

CA Suraj Lakhotia Admin

Because you would not know how much benefit you would get in next year.

Ok sir got it but isn't it violation of matching concept?

Thread Starter

Atharv Sankliya

CA Final

★ 3K+

27-May-23 18:00

Thread Starter

Atharv Sankliya

Ok sir got it but isn't it violation of matching concept?

Because the revenue from. That expense will arise in next year since it is new product Sir please clarify

Thread Starter

Atharv Sankliya

CA Final

★ 3K+

27-May-23 18:04

Revenue cannot be directly attributed to advertisements.

CA Suraj Lakhotia

Admin

29-May-23 08:30