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Pre-operating Exp

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(Querist)
01 September 2008 Can we capitalise pre-operating exp like purchase of food items for pizza outlet -purchased for a trial basis. it includes items like cheese ,butter, sauce ,cutlery& Crockery vegetables etc.,
the amount is very high (approx: 50lakhs)

this is foe opening new pizza outlets.
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Mitesh Shah

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Mitesh Shah (Expert)
01 September 2008 hi,

as per the my openion the expense incurred before when plant or project not started commercial production. all expences like trail basis expences, raw materla for that are capitalised.

but when its produce for commercial use than all related expences are revenue expence mot capitallised

so above expenses are pre operating expense for trail basis not for commercial(Sale to customer) so its capitalised.

Mitesh Shah.
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CA.Tarun Maheshwari

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CA.Tarun Maheshwari (Expert)
01 September 2008 Yes, you can. In my opinion these can be treated as defrred revenue expenditure and can be written off over a period of time.
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