Question

    A company incurs heavy advertising expenditure of ₹2

    crore in launching a new product. It wishes to defer the expense over 4 years. As per accounting standards, how should this be treated?
    A Shown as a deferred asset Correct Answer Incorrect Answer
    B Amortized over 4 years Correct Answer Incorrect Answer
    C Written off in the first year itself Correct Answer Incorrect Answer
    D Capitalized and depreciated Correct Answer Incorrect Answer

    Solution

    As per AS-26 (Intangible Assets), such expenses are revenue in nature and should be fully written off in the year incurred.

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