Preliminary expnses
This query is : Resolved
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
(Expert)
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
(Expert)
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.
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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