Assets are those entities which are capable of being converted to cash or at least into any other asset. The items on the Assets side of the balance sheet, which do not possess this characteristic should not be included in the value of Fixed Assets.
Some such asset side items
- Profit and Loss Appropriation a/c (debit balance)
- Preliminary Expenses
- Discount on issue of Shares/Debentures to the extent not written off
- Miscellaneous Expenses
Deferred Revenue Expenditure
Meaning
- Postponed until a future date;
- Withheld until a future date.
Synonyms
- Late
- Delayed
- Postponed
- Overdue
Deferred revenue expenditure is an expenditure that has already been incurred but whose charge (all or some proportion of the expenditure) to the profit and loss account is being postponed to the future accounting periods.
The value of the expenditure whose charge is being deferred can be treated as both an accumulated loss or as an asset. There are arguments for and against both these treatments. The decision as to under what head this should go is to be taken by the management. Based on that decision, it would be included under the appropriate head in the "Balance Sheet" for the purpose of analysing funds flow.
Where there is no indication as to its treatment, one can choose either of the treatments indicating the choice taken up.
