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What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm?
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Treatment of Deferred Revenue Expenditure before the Time of Upcoming New Partner in a Firm
- Recognition:
- Accounting Treatment:
- Adjustment in the Books of Accounts:
- Impact on Financial Statements:
- Disclosure:
Deferred revenue expenditure refers to expenses that are incurred during the current accounting period but are written off over a period of subsequent years. These expenses are treated as assets and are amortized over a specific period.
The balance of deferred revenue expenditure before the time of the upcoming new partner in a firm should be amortized as per the original agreement or as per the accounting policies of the firm. The amortization should be done systematically over the remaining useful life of the asset.
To adjust the balance of deferred revenue expenditure, the firm should debit the amortization expense account and credit the deferred revenue expenditure account. This adjustment should be made at the end of each accounting period until the entire balance is fully amortized.
The amortization of deferred revenue expenditure will have an impact on the firm's financial statements. It will reduce the reported expenses in the income statement, which will result in higher profits. However, it will also reduce the value of the asset on the balance sheet.
The firm should disclose the balance of deferred revenue expenditure in the notes to the financial statements along with the method of amortization and the remaining useful life of the asset. This will provide transparency to the stakeholders regarding the treatment of deferred revenue expenditure in the firm.
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What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm?
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What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm?.
What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the treatment of the balance of deferred revenue expenditure before the time of upcoming new partner in a firm?.
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