30 July 2008
Preliminary Expenses are governed by Guidance Note on Treatment of Expenditure during construction period. and not by AS 26. These Expenses include company formation expenses in connection with issue of shares and debentures and getting the preliminary public documents such as memorandum, articles prospectus, etc. These should be written off in a period not exceeding 5 years.
31 July 2008
I opine that preliminary expenses are covered by Guidance Note on Treatment of Expenditure during Construction Period but these expenses should be capitalized by apportioning them on capital assets.
But in Income Tax Act Sec 35D deals with preliminary expenses and treatment of the same.