Accounting expense before commencement of partnership

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 July 2011 A partnership commences as per deed on 25th April. But few expenses was incurred before that period including assets purchase. All are in name of partnership but it was not formed as per deed. how to book those assets, expenses?

Partners wants to bring in personal asset say two wheeler/computers etc as capital. What shall be the value of assets?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

26 July 2011 We know that expenses of Stamp Paper is required to be incurred before the firm is
incorporated.

So how we can deal with such expenses. This being a capital expenditure
is divided between the partners and debited to their capital account. Similarly after formation of firm the pre-incorporation expenses can be debited proportionately to partners capital account.
*
The amount contributed by the would be partners for any asset purchased prior to incorporation, can be credited to their capital accounts and debited to the asset account on the first day of incorporation.
*
The partners can transfer their assets to the firm at an agreed price by the other partners. The date and value when the asset A/c is debited and partner's A/c is credited are relevant for the purpose of calculation of capital gains in the hands of the transferor partners as it will amount to transfer of asset from the partner to the firm.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now