Need to know the treatement of Pre-Operative Expenses and pr

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Querist : Anonymous

Querist : Anonymous (Querist)

14 October 2010 Need to know the treatement of Pre-Operative Expenses and preliminary expenses. How would you differentiate these two?

Gurpreet

Gurpreet (Expert)

24 October 2010 Guidance Note on Terms Used in Financial Statements defines preliminary expenses as "Expenses relating to the formation of an enterprise. These include legal, accounting and share issue expenses incurred for formation of the enterprise."
The concept of pre-operative expenses was laid by Guidance Note on Expenses during construction. It provided that, all expenses before commencement of operations which cannot be attributable to any asset under AS-10/AS-26 can be carried forward under the head "pre-operative expenses" under miscellaneous expenses in the balance sheet. However, this guidance note has been withdrawn in August 2008 and as such all such expenses need to be written off as and when these are incurred.
Further, AS-26 provided preliminary expenses to be written off as when these are incurred.

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Querist : Anonymous

Querist : Anonymous (Querist)

24 October 2010 thank u r sir
very usefull

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