Pre-operative expenses

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aakashgilda (Querist)
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08 July 2013 A private ltd companies is being formed in F.Y 11-12 but no operation is being started.
In F.Y 12-13 manufacturing operations in being started form August month i.e purchase and other Manufacturing process.
So in this case should we add the expenses incurred during period 1-4-2012 to 31-7-2012 in pre-operative expense or we should expense it out in P/L.

Prashanth

Prashanth (Expert)
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08 July 2013 Hello,

Expenditure which has been incurred during the year,11-12 and 01.04.2012-31.07.2012,is required to be capitalize to the total assets on total cost basis.

aakashgilda

aakashgilda (Querist)
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08 July 2013 means it should be trf to pre-operative account na...?
and if only purchase is being started on 1-4-2012 and not the production then !

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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14 July 2013
Dear What you understand with per-oprative expenses
Means those capital expenses incurred before commercial production. it may be case of expansion.

purchasing of raw material related to production is not pre-oprative expenses

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