Capitalised Revenue??

Capitalised Revenue??

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I'm trying to understand various accounting terms for my RICS APC, and Capitalised Revenue has cropped up on more than one occasion, would anyone mind explaining?

I vaguely understand Deferred Revenue as a provision in your accounts for the difference between the depreciated value of an asset and the tax value of the asset, but that's about it.

Also, if anyone is able to explain what Defferred tax, and deferred provision is , that would be very helpful.

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By johngroganjga
29th Aug 2013 16:24

Your definition of deferred revenue is in fact a definition of deferred tax!

Deferred revenue is income received in advance of the period in which it is earned.  Rent received by a landlord quarterly in advance would be a classic example of that.  Deferred revenue is included in the balance sheet under creditors.

Capitalised revenue and deferred provision are terms that in several decades of full-time accountancy practice I have never come across! 

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By blok
29th Aug 2013 17:07

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Capitalised revenue:

Say I have 200 acres of land with an agricultural value of £2,000,000

Along comes a developer who would like to site a number of tubines on this land and pay me a rent of £500,000 per annum for 20 years.

My land, which will be subject to the lease with the developer will have increased in value.  The new value could be £500,000 multiplied by say 8.  The new value could be £4m.

 

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By johngroganjga
29th Aug 2013 17:18

Agree that "capitalised

Agree that "capitalised revenue" is a valuation term.  It is not accounting term.  No such thing ever appears in accounts.

In blok's example, land would appear in his accounts as "freehold land at valuation".  The basis of valuation might be capitalised revenue.

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