Treatment of preoperative expenses

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(Querist) 15 May 2010

Pre-operative expenses and its treatment in balance sheet as per Schedule VI of Companies Act, 1956?


Rasesh (Expert) 17 May 2010

If directly related to any asset or block of asset, then such expenses should be capitalised. Till such time, show them as Pre-operative expenses in the balance sheet (Asset) - Miscellaneous Expenditure.

If they are not directly related to any asset, then show them as preliminary expenses in the balance sheet (Asset) - Miscellaneous Expenditure



CA. Rabindra (Querist) 21 July 2010

Mr. Rases thanks for ur reply. But as per my seniors and frens the pre-operative expenditure should be taken as a part of gross block of aasets and not a Miscellenious Expenditure. When work complets we distribute all the POP expenses to respective assets ; however till the allocation made we show it as a part of FA gross block as per Schedule VI of the Compnies Act, 1956. Please clarify if Im wrong?

Rasesh (Expert) 21 July 2010

Even this approach is correct.

CA. Rabindra (Querist) 21 July 2010

Thank u



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