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Discussion > Accounts >

pre-operative expenses treatment

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Articled Assitant

[ Scorecard : 0]
Posted On 05 June 2008 at 14:06

Dear Sir/Madam,

I want to know about the treatment of pre operative expenses in financial statements as per companies act. Also specify which accounting policy is applicable to it or under which notification it is.

pl tell me the difference between preoperative & preliminary expenses.

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Posted On 17 June 2008 at 13:24

what is pre-operative exp is there any diff between priliminary and pre-operative exp

Posted On 30 June 2008 at 15:55

hi friends,

Please let me know the treatment of Pre operative expenses under the Income Tax Act . Further unit purchased some Assets like computer , Vehicle etc. and started construction of building as on 1.1.2007. construction complted on 31.12.2007. Prepoerative exp. also capitalized on 31.12.2007. Prodction started on 1.11.2007 for trial run. Trial run exp & Sale also capitalized on 31.12.2007 in the ratio of fixed assets like building, P& M etc.

Actual production started as on 1.1.2008.


whether dep. can be claimed for the year 2006-07 under the income tax act 1961 while actual production date is 1.1.2008.

please mention case law or section which talks about the treatment of such expneses or fixed assets purchased prior to commecnement or actual prodcution?


Arun Choudhary

[ Scorecard : 65]
Posted On 12 September 2008 at 15:23

please clarify it----

can depreciation be charged before commencement of business in case of a newly formed company???   if yes..then  as there is no P&L a/c..the same would be treated as pre operative exp..isn't it???


[ Scorecard : 20]
Posted On 12 September 2008 at 22:42

how should the pre-operative expenses (other than those relating to preliminary expenses) which are revenue in nature be disclosed in the financial statements?

Posted On 20 September 2008 at 12:36

How do I treat expenses incurred before the start of the business? sole proprietorship business...


Posted On 24 September 2008 at 18:57

Expenses incurred till the date of Company formation are treated as preliminary expenses and shown in the asset as as miscellaneous expenditure.The expenses incurred from the date of Company formation till the date of commercial production are treated as preoperative expenses.The preoperative expenses are allocated to fixed assets after commercial production.

Posted On 30 September 2008 at 09:55

income under the head house property

Venkat Rao Marella
Manager Business Finance

[ Scorecard : 1432]
Posted On 01 October 2008 at 20:50

Originally posted by :madhukar
" hi buddies
pls let me know the treatment of pre-operative expenses
and where it shoulb be shown in the financial statement
pls clarify


Pre operative expenses can be calptalised upto the date of commencement of production. The total expenses transfered to pre opeative expense account should be shown on the assets side of B/s under Misc expense not W/o.

Posted On 10 October 2008 at 09:57

Originally posted by :madhukar
" hi buddies
pls let me know the treatment of pre-operative expenses
and where it shoulb be shown in the financial statement
pls clarify


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