Preliminary expnses

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naga raju (Querist)
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28 September 2012 What is the treatment of preliminary expenses as per Companies Act 1956. Whether it is allowed in one installment or 5 installments .

CA Lokesh Pokharna

CA Lokesh Pokharna (Expert)
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28 September 2012 companies act dosent provide any treatment , it should be as per revised sch VI or as per applicable AS.. in practice prel exp. w/off in 5 installments.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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28 September 2012 Preliminery expenses if doesnot create any intangible asset then should be written off fully in the year of expense as per AS26.
Pls read para 56(a) of AS26-
Expenditure on start-up activities (start-up costs), unless this expenditure is included in the cost of an item of fixed asset under AS 10, Preliminary expenses incurred in establishing a legal entity such as legal and secretarial costs, expenditure to open a newfacility or business (pre-opening costs) or expenditures for commencing new operations or launching new products or processes (pre-operating costs)should be recognised as expense in the year of expenditure.

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