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Financials

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(Querist)
15 November 2011 Hi,

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.

Is this procedure correct.
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JIGAR DALAL

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JIGAR DALAL (Expert)
17 November 2011 Yes Procedure is correct.
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