- - -

Deferred Revenue Expenditure as a Loss for New Partner

- - -

Definition of Deferred Revenue Expenditure:
Deferred revenue expenditure refers to those expenses that are incurred during an accounting period but are not written off as expenses in that period. Instead, these expenses are spread over a number of years.

- - -

Consideration for New Partner:
When a new partner joins the business, the deferred revenue expenditure may be considered as a loss from the perspective of the new partner. This is because the expenses that were deferred in previous years will now be spread over a longer period of time, impacting the profit and loss statement of the business.

- - -

Impact on Profit and Loss Statement:
The deferred revenue expenditure will reduce the profits of the business in the year it is recognized. This reduction in profits will affect the profit-sharing ratio among the partners, including the new partner. The new partner will bear a portion of the loss resulting from the recognition of the deferred revenue expenditure.

- - -

Adjustment for New Partner:
When a new partner joins the business, the impact of the deferred revenue expenditure on the profit and loss statement must be considered. The new partner's share of the loss due to the recognition of deferred revenue expenditure should be accounted for in the profit-sharing ratio to ensure fair distribution of profits and losses among the partners.

- - -

Conclusion:
In conclusion, deferred revenue expenditure can be considered as a loss for a new partner as it reduces the profits of the business in the year it is recognized. The new partner will bear a portion of this loss, and adjustments should be made to the profit-sharing ratio to account for their share of the impact.