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(i) it is appropriate to anticipate or defer that type of cost at the end of the financial year, and
(ii) costs are incurred unevenly during the financial year of an enterprise.
Therefore, the treatment done relating to deferment of Rs. 4,70,000 is not correct as expenditures are
uniform throughout all quarters.
Thus, considering the above, the correct net profits to be shown in the Interim Financial Report of the second
quarter shall be Rs. 39,36,400 (Rs. 50,00,000 - Rs. 1,04,000 - Rs. 4,89,600 - Rs. 4,70,000).
22. 10
