Question

At the time of commencement of business, preliminary expenses incurred are treated as _________________.

• A. Revenue Expenditure
• B. Capital Expenditure
• C. Deferred Revenue Expenditure
• D. None of the above.

Answer 1

Answer: (C)

Deferred Revenue Expenditure

Deferred Revenue Expenditure - Sometimes, some expenditure is of revenue nature but its benefit likely to be derived over a number of years generally 3 to 5 years. Such expenditure is called deferred revenue expenditure. Example of deferred revenue expenditure are:
1. Heavy advertisement expenditure
2. Discount on debentures
3. Insurance premiums
4. Advertisement
5. Licensing
6. Preliminary expenses