A company incurred Rs. 10 crore on massive advertisement campaign during CWG in order to launch a new product in the market. This expenditure is a ______.

Capital Expenditure

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Revenue Expenditure

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Deferred Revenue Expenditure

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None of the above

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Solution

The correct option is C Deferred Revenue Expenditure
Deferred revenue expenditure is an expenditure which is revenue in nature and incurred during an accounting period but the benefits from this is to be arrived in coming years.

Massive advertisement campaign done by the organization will give the benefits to the business in coming years too. Hence this should be treated as deferred revenue expenditure.

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Similar questions

Q. Heavy expenditure incurred on advertisement at the time of introducing a new product is a Deferred Revenue Expenditure.

Distinguish between capital and revenue expenditure and state whether the following statements are items of capital or revenue expenditure.
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(b) Expenditure incurred to provide one more exit in a cinema hall in compliance with a government order.
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Q. Select the most appropriate alternatives from those given below and rewrite the statements :

Heavy advertising expenditure for launching a new product is called as ______.
a) Capital Expenditure
b) Revenue Expenditure
c) Deferred revenue expenditure
d) None of these

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