Q.What is Deferred Revenue Expenditure ? Give two examples.

Deferred revenue expenditure is heavy revenue spending whose benefit lasts several years, so it is spread and written off over those years; examples are heavy advertising and large R&D/preliminary expenses.

Meaning: Deferred revenue expenditure is essentially of a revenue nature, but its amount is very large and the benefit from it is expected to be received over a number of accounting years, not just the year in which it is incurred. Therefore, instead of charging the whole amount to the Profit & Loss account of one year, only a portion is written off each year and the balance is carried forward and shown as an asset (fictitious asset) in the balance sheet until fully written off.

Examples (any two):

• Heavy advertising and sales-promotion expenditure incurred to introduce a new product, whose benefit is expected over several years.
• Large research and development expenditure. …