27 August 2010
A company was incorporated in 2005 and had incurred preliminary expenditure of Rs.50,000.This amount was shown in the balance sheet of that year as preliminary expenditure.The company had not commenced its business.It now wishes to file its returns under Company Law Settlement Scheme for the years 2006-2010.Can u please suggest how to write off this preliminary expenditure i.e.whether it can be written off fully in 2006 or propotionately each year?
First of all preliminary expenses are shown in the first Board meeting after incorporation of Company. The Board may decide the amortization period and it will be shown in Balance Sheet under Miscellaneous Expenses Head and also shown in Noted to Accounts.
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