What if underwriting commision is under non current asset
Answers
Parth! Deferred revenue expenditures are big payments of expenses. All these expenses are revenue nature but due to huge amount, we get its benefits more than one year. Underwriting commission is in this category. We can not get all the benefit of this service within one year. That is the reason, we estimate written off value of underwriter commission and then we transfer same it in profit and loss account.
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Answer:
It is not possible to show underwriting commission under noncurrent asset.
Explanation:
In this question, we have to determine what happens when the underwriting commission is under the noncurrent asset. The underwriting commission is an expense for the company because it is paid at the time of the issue of the share. In the books of the company, it is shown as deferred revenue expenditure which means the benefits of the expense received in the parts in future. The amount of the underwriting commission is written off every year. If the underwriting commission is shown under the noncurrent asset it cannot be written off in the future. From this, we can say that the underwriting commission cannot shown under the noncurrent assets.
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