LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Preliminary expenses

Poonam (prop) (130 Points)

26 November 2014

if there is loss ,can company write off preliminary expense of first year in the second year as there is no profit second year .....pls suggest

Reply
Follow
Share

17 Replies

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 26 November 2014

i have a doubt in ur doubt...its not clear in which year u have profit and in which year u have loss?

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 26 November 2014

when ther is no profit in second year.... why u want to write of even the amt of first year ???

confusion is there

Poonam (prop) (130 Points)
Replied 26 November 2014

Actually company formed in 2012-13 there is loss and preliminary expenses of 5900 and now in year 2013-14 there again is loss......my question is abt treatment of preliminary expenses? What to do ....thanks in advance

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 26 November 2014

unless u dont have sufficient profit to cover losses and writing off preliminary exp till that tim u need to carry forward it in balance sheet.

hope its clear now.

CA AnKiT BoHrA (AB) (Manager) (25955 Points)
Replied 26 November 2014

Agreed with Above expert..!!

raj kamal singh (Auditor) (528 Points)
Replied 26 November 2014

As per AS-26,preliminary expenses should be w/o in same year .So.all the above answer seems to be untrue

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert) (85930 Points)
Replied 26 November 2014

for applying as 26 there has to be enough profit to set off such exp and losses and now your ans seems unture.

Rohit (M.Com) (28 Points)
Replied 26 November 2014

AS 26 says write off.. then irrespective of profit, preliminary expense should be w/off.. Instead of showing the prel exp on Asset side. it should be shown as P&L negative balance

raj kamal singh (Auditor) (528 Points)
Replied 26 November 2014

Rohit is right n matter is concluded

jatin aswani (ARTICLE ASSISTANT) (102 Points)
Replied 26 November 2014

Fully w/off in the year it is incurred ...but as rohit says, I don't think it is written in AS 26....In fact this is a conclusion drawn based on schedule 3 of companies act 2013....as there is no item like preliminary exps mentioned there..

Nikhil (Articleship) (26 Points)
Replied 26 November 2014

Agree with rohit, the same has been provided in AS 26.

(Guest)

Agreed with Rohit...previously preliminary expenses was allowed to be shown in assets side until they are written off...but now after revised schedule VI is applicable it clearly states that preliminary expenses can not be shown as asset; to be shown as deduction to reserve & surplus...

*RENU SINGH * (✩ §m!ℓ!ñġ €ม€§ fℓม!ñġ ђ♪gђ✩ ) (21627 Points)
Replied 27 November 2014

Concur with rohit .

Neeraj Sharma (Accountant) (285 Points)
Replied 27 November 2014

as per AS 26 preliminery exp. will be w/off in first year. irrespective of prifit. nd whether reserve & surplus balance becomes negative. further schedule Iii there shall not be ficititious item represent in b/s.