Prepaid expenses

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This query is : Resolved

bhushan gupta (Querist)

11 February 2012 A ltd. has paid factory license fees on 1/1/2012 Rs.100000.00 for the period 1/1/2012 to 31/12/2012. Whether on 31/3/2012 prepaid to be calculated? if yes according to which Accounting standard to be calculated? One member is maintaining that prepaid to be calculated only when enduring benefit is available like insurance exp. In the present case no enduring benefit is available so no prepaid to be calculated in license fees?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

12 February 2012 If you consider such expenses on due basis, these are to be incurred by you. The Fee charged can not be divided in No of months practically, as the same is annual fixed charge. In my view, no need to calculate prepaid fee separately.

CA. RAGHAV GARG

CA. RAGHAV GARG (Expert)

13 February 2012 Hi Bhushan,

Here I Differ with our other Expert, because i feel on the accrual basis of accounting, you should create a Prepaid Expense and have to book remaining expense in the next year.

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