Brokerage on the issue of shares and debentures is a _______expenditure :a)Revenueb)Capitalc)Deferred Revenued)Partly capital partly revenueCorrect answer is option 'C'. Can you explain this answer?

Question

Answer

Brokerage on the issue of shares and debentures is a Deferred Revenue Expenditure. This expenditure is incurred in one period but its benefit extends to a period of 3 to 5 years. Hence this amount is deferred and written off.

Answer

Brokerage on the issue of shares and debentures is a Deferred Revenue Expenditure. This expenditure is incurred in one period but its benefit extends to a period of 3 to 5 years. Hence this amount is deferred and written off.

Answer

Explanation:

Brokerage is a fee paid to a broker for their services in buying or selling shares or debentures on behalf of the client. It is a type of expense that is incurred in the process of raising capital or financing the business.

Deferred Revenue Expenditure:

Deferred Revenue Expenditure is an expense that is incurred in the current accounting period but its benefits are expected to be derived over a number of future accounting periods. The cost of brokerage on the issue of shares and debentures is an example of deferred revenue expenditure. The benefit of brokerage expense is derived over a number of future accounting periods, as the shares and debentures continue to exist and generate revenue for the company.

The accounting treatment of deferred revenue expenditure is to treat it as an asset and spread it over a number of years. In the case of brokerage on the issue of shares and debentures, the expenditure is spread over the life of the shares and debentures. This is done by creating a separate account called 'Discount on Issue of Shares' or 'Discount on Issue of Debentures'. The amount of brokerage is debited to this account and is gradually written off over the life of the shares or debentures.

Conclusion:

In conclusion, brokerage on the issue of shares and debentures is a deferred revenue expenditure as it is incurred in the current accounting period but its benefits are expected to be derived over a number of future accounting periods. The accounting treatment for deferred revenue expenditure is to spread it over the life of the asset and treat it as an asset.

Answer

Bcoz it is advertising expenses

Answer

Revenue

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