What is Deferred Revenue Expenditure? Can it be recognised as an Assets?

It is a Revenue Expenditure which is incurred during an accounting period but the benefit arising out of it extends beyond that accounting period.

Such an expenditure is unusually large than the normal expenditure under the head (For example-Advertisement of a new product). The expenditure so incurred will certainly give benefit in the period beyond the accounting period in which the expenditure was incurred. It was thus, be proper to spread the expenditure over a period and not charge the entire amount to the Profit and Loss Account for the year in which the expense is incurred.

Sometimes even a large loss, arising from an accident or other unforeseen circumstances, may be spread over three or four years instead of being charged wholly against the revenues of the year in which the loss is actually suffered. The loss of Building because of an earthquake may be treated as Deferred Revenue Expenditure.

Deferred Revenue Expenditure is a fictitious asset: Although it appears on the assets side of the Balance Sheet, it is not really an asset to the business.

It should be noted that As per Para 56 of AS-26 “Intangible Assets” issued by ICAI, Deferred Revenue Expenditure is not allowed in Balance Sheet. 

Para 56 of AS-26, “Intangible Assets”:-

In some cases, expenditure is incurred to provide future economic benefits to an enterprise, but no intangible asset or other asset is acquired or in other cases, the expenditure is recognised as an asset when it is incurred.


  1. Expenditure on Start-up activities (Preliminary Expenses);

  2. Expenditure on Training activities;

  3. Expenditure on Advertising and Promotional activities; and

  4. Expenditure on relocating an enterprise.

#deferredrevenueexpenditure #fictitiousassets

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