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Treatment of preoperative expenses (Corporate Law)

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This query is : Resolved

( Querist )
15 May 2010

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


( 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?


( Expert )
21 July 2010

Even this approach is correct.

CA. Rabindra

( Querist )
21 July 2010

Thank u



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