Please give your comments and suggestions for the case given below:
A company is preparing its financials for the first year. They have not commenced operations yet. Therefore the company is proposing to capitalize its expenses as pre-operative expenses to be written off from the year of commencement of operations. All expenses including depreciation on fixed assets is transferred to pre-operative expenses under miscellaneous expenditure. The company will not have Profit & Loss Account for the year.
Deferred taxation effect is not arising here. This will be considered with retrospective effect from the year of commencement of operations.
CAclubindia
