Accounting Standards
This query is : Resolved
12 March 2020
Is there any AS for the accounting of preliminary expenses.
12 March 2020
Yes AS 26.
See para 56.
56. In some cases, expenditure is incurred to provide future economic
benefits to an enterprise, but no intangible asset or other asset is acquired or
created that can be recognised. In these cases, the expenditure is
9 Accounting Standard (AS) 28, ‘Impairment of Assets’, specifies the requirements
relating to impairment of assets.
Intangible Assets 521
recognised as an expense when it is incurred. For example, expenditure on
research is always recognised as an expense when it is incurred (see
paragraph 41). Examples of other expenditure that is recognised as an
expense when it is incurred include:
(a) expenditure on start-up activities (start-up costs), unless this
expenditure is included in the cost of an item of fixed asset under
AS 10. Start-up costs may consist of preliminary expenses
incurred in establishing a legal entity such aslegal and secretarial
costs, expenditure to open a new facility or business(pre-opening
costs) or expenditures for commencing new operations or
launching new products or processes (pre-operating costs);
See para 56.
56. In some cases, expenditure is incurred to provide future economic
benefits to an enterprise, but no intangible asset or other asset is acquired or
created that can be recognised. In these cases, the expenditure is
9 Accounting Standard (AS) 28, ‘Impairment of Assets’, specifies the requirements
relating to impairment of assets.
Intangible Assets 521
recognised as an expense when it is incurred. For example, expenditure on
research is always recognised as an expense when it is incurred (see
paragraph 41). Examples of other expenditure that is recognised as an
expense when it is incurred include:
(a) expenditure on start-up activities (start-up costs), unless this
expenditure is included in the cost of an item of fixed asset under
AS 10. Start-up costs may consist of preliminary expenses
incurred in establishing a legal entity such aslegal and secretarial
costs, expenditure to open a new facility or business(pre-opening
costs) or expenditures for commencing new operations or
launching new products or processes (pre-operating costs);
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