Heavy expenditure of ₹5,00,000 incurred on launching a nationwide advertising campaign for a new product line is best classified as which of the following?
Answer and explanation
Correct answer: B. Deferred revenue expenditure
- Step 1: Analyze the nature of heavy advertising for a new product launch. It does not create a tangible asset.
- Step 2: However, the revenue benefits of the campaign extend beyond one financial year.
- Step 3: Under accounting standards, it is treated as deferred revenue expenditure and written off over the benefit period.
Answer
Deferred revenue expenditure.
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