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pre operative expenses

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17 July 2010 A Pvt. Ltd. Co. incurred pre operative expenses of 300000(05 - 06) & this expenses are carry forward on balance sheet as loans & advances for (06 - 07)(07-08)(08- 09)can this is right treatment?
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CA Punit

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CA Punit (Expert)
17 July 2010 Pre operative expenses are preliminary expenses (not prepaid expenses) & should not be shown under loans & advances.
They are are to be written off gradually after the business starts working.
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CA. BIJENDER KR. BANSAL

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CA. BIJENDER KR. BANSAL (Expert)
17 July 2010 Agreed,
Pre operative expenses are preliminary expenses & should not be shown under loans & advances.

It will be written off in equal instalment of 5 year from the year of commencment of business acitivities.
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