Pre operating expense

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Ruman Chhajerh (Querist)

13 May 2017 A pvt limited company was incorporated in 2011 but the company has not commenced any activity yet. Please tell me how to account for the expenses incurred in relation with ROC and expenses related with getting the environment clearance certificate i.e. amount paid to consultant and to government

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

13 May 2017 Charge of all expenses to P&L ac.

Ruman Chhajerh

Ruman Chhajerh (Querist)

13 May 2017 Thank you sir... Can u please tell me the standard for the same

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

13 May 2017 Under AS 10
Paragraph 9.2 of AS 10,Administration and other general overhead expenses are usually excluded from the cost of fixed assets because they do not relate to a specific fixed asset. However, in some circumstances, such expenses as are specifically attributable to construction of a project or to the acquisition of a fixed asset or bringing it to its working condition, may be included as part of the cost of the construction project or as a part of the cost of the fixed asset.
Expenses incurred on formation of an entity cannot be said to be attributable to bringing an asset/project into existence and, therefore, cannot also be included as part of cost of fixed assets.

Ruman Chhajerh

Ruman Chhajerh (Querist)

13 May 2017 But can the charges of consultancy fees and charges for environment clearance

Ruman Chhajerh

Ruman Chhajerh (Querist)

13 May 2017 But can the charges of consultancy fees and charges for environment clearance are not related with the formation of an entity as they are incurred after the entity is incorporated

Ruman Chhajerh

Ruman Chhajerh (Querist)

13 May 2017 and by expenses related to ROC i meant the charges including late fees for annual filings

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