accounts
This query is : Resolved
CA Ravi Sisodia
(Expert)
22 August 2010
Asset created by an accounting entry (and included under assets in the balance sheet) that has no tangible existence or realizable value but represents actual cash expenditure. The purpose of creating a fictitious asset is to account for expenses (such as those incurred in starting a business) that cannot be placed under any normal account heading. Fictitious assets are written off as soon as possible against the firm's earnings.
CA Ravi Sisodia
(Expert)
22 August 2010
Fictitious Assets are not assets which are tangible and
visible like buildings, machinery , computer but the
expenditure on some activity which is considered as a
Capital expenditure instead of Revenue expenditure. When
expenditure incurred amount is not debited to Profit and
Loss A/C but shown as Fictitious asset and over a period
the amount is writtenoff or debited to Pand L account. For
example Share issue expenses by a Corporate, This is not
debited to P& L A/c in the year in which it is incurred but
debited in instalments as decided by Management over few
years.
visible like buildings, machinery , computer but the
expenditure on some activity which is considered as a
Capital expenditure instead of Revenue expenditure. When
expenditure incurred amount is not debited to Profit and
Loss A/C but shown as Fictitious asset and over a period
the amount is writtenoff or debited to Pand L account. For
example Share issue expenses by a Corporate, This is not
debited to P& L A/c in the year in which it is incurred but
debited in instalments as decided by Management over few
years.
CA Ravi Sisodia
(Expert)
22 August 2010
these are assets not represented by tangible possession or
property. example of preliminary expenses discount on issue
of shares, debit balance in the profit and loss account
when shown on the assets side in the balance sheet.
property. example of preliminary expenses discount on issue
of shares, debit balance in the profit and loss account
when shown on the assets side in the balance sheet.
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