Can the discount offered by a retailer be treated as Deferred Revenue Expenditure???
In this case the discount may attract new buyers to enter the shop and purchase/try products and if they like those products they may become regular customers of the Retailer
So discount has the potential of creating new customers for a Retailer who would make Repeat Purchases year after year
So isnt this a Deferred Revenue Expenditure???
Even Advertisement is treated as Deferred Revenue Expenditure although there is NO Guarantee that new customers would purchase the product after viewing the advertisement
Or is Advertisement a Deferred Revenue Expenditure as it involves a huge amount which if written off in 1 year will significantly reduce the profits
Dear Student,
No, discount allowed by a retailer is not to be treated as deferred revenue expenditure as it is allowed/incurred to get the payment for the present sales; As correctly said there is no guarantee for the futuristic sales that might happen due to allowing of this discount;the complete amount is to be considered as present period expense only;
Also, Advertisement expense is treated as deferred revenue expenditure because of the huge amount involved and expended with a motive to cover up future period;
Regards,
No, discount allowed by a retailer is not to be treated as deferred revenue expenditure as it is allowed/incurred to get the payment for the present sales; As correctly said there is no guarantee for the futuristic sales that might happen due to allowing of this discount;the complete amount is to be considered as present period expense only;
Also, Advertisement expense is treated as deferred revenue expenditure because of the huge amount involved and expended with a motive to cover up future period;
Regards,