Pre incorporation expenses

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Bhakti (Querist)
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25 February 2010 Expenses spent before incorporation of a private limited company will be debited to preliminary expenses. will these include expenses in setting up of the office, buying of computer ect?

Rasesh

Rasesh (Expert)
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25 February 2010 These should be treated as CWIP and then capitalised when the office is ready.

The office should be under the head: buildings and the computer under office equipments or computers

Bhakti

Bhakti (Querist)
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25 February 2010 Thanks. Actually i would like to know particularly regarding:
Will it be possible to show amount spent in setting up the office and buying the computer etc as part of share capital? Please note that the company has already applied for name reservation with paid up capital of Rs 5,00,000 and the expenses have exceeded or is almost near to 5,00,000. Otherwise also advise me eventhough the expense has not exceeded Rs 5 lac.

Rasesh

Rasesh (Expert)
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25 February 2010 It is possible to show it as a part of share capital. But the subscription amount shown in the MOA would have to be collected in cash/cheque.

You may first collect the amount and then return the amount back to the promoters if they have provided such amount for the office.

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