Preliminary expenditure

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This query is : Resolved

manoj mahimkar (Querist)

16 July 2009 Company has increased it authorised capital in the board meeting held on 25th March 2009, which resulted in liability of Rs. 50000/- being ROC charges and Stamp duty. General body meeting was held on 11th May 2009 and proposal of increase in authorised capital was pproved.Payment of or Rs. 50000/- was paid on 16th May 2009.
How would one treat Rs. 50000/-?
Should it be booked as outstanding preliminary expenditure for the year F.Y. 2008-09 or book as an preliminary expenditure in the year of payment i.e. F.Y.2009-10?
Any reference to case laws would be higly appreciated

vinod kumar lalwani

vinod kumar lalwani (Expert)

16 July 2009 hello!

IT seems that co. is a runnning co. and increased its authorised capital.
these are not prelimiery expenses as these are not incurred before incorporation of the company so these are simply legal and administratin charges paid for increasing the capital.

now the year of accounting is concern then as general meeting held on 11th of may and co. will show that increased capital in the balance sheet of the year 2009-10 then expenses will be booked in this year.

in accounting there can not be any case law we have to go simply with accounting standards.

in my point of veiw these should be charged off wholly in the year of incuranec as expenses.

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