Accounting of transporter

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Sarita (Querist)
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15 April 2018 Facing problem regarding accounting for a transport company. The company books freight once the trip is complete. But starts incurring expense like fuel, driver advance etc from start of trip. Now in month of march, there are running trips which wil be complete in April. So how and in which FY to book exp related to such trips....plz guide as per income tax purpose also...

Guest

Guest (Expert)

15 April 2018 If you can identify those expenses trip-wise. You can show these expenses as deferred revenue expenditure in the balance sheet as "Expenses on Uncompleted Trips".
In income tax, profit is calculated based on the accounting process followed. In this case, you can claim this expense in next FY.

Sarita

Sarita (Querist)
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15 April 2018 Thank u sir.. Sir can you give reference of relevant accounting standard plz....

Guest

Guest (Expert)

15 April 2018 There is no accounting standard for this situation. You can choose any accounting policy as per accounting framework.

Sarita

Sarita (Querist)
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15 April 2018 Ok thanks sir

Guest

Guest (Expert)

16 April 2018 I went through this again. And I'd like to add that this does not create any asset for you. Even AS 26 prohibits from showing non-asset things on balance sheet's asset side.
Hence, you should charge these expenses in the March month. Do not follow my earlier advice.
Thanks

Sarita

Sarita (Querist)
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16 April 2018 In this case there will be mismatch in income and expenses for march....Can we do this

Guest

Guest (Expert)

16 April 2018 No. Actually, it's about whether the amount spent is an asset.
AS-26, para 56 is: expense incurred for future benefits, but doesn't create any asset, is recognized as expense.

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