27 May 2008
As per AS 26 whether preliminary expenses are to be written off immediately and not to carry over the period of years? If yes then from when it is applicable?
Amortisation Period Paragraph 63. The depreciable amount of an intangible asset should be allocated on a systematic basis over the best estimate of its useful life. There is a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. Amortisation should commence when the asset is available for use.
Paragraph 56 In some cases, expenditure is incurred to provide future economic benefits to an enterprise, but no intangible asset or other asset is acquired or created that can be recognised. In these cases, the expenditure is 9 Accounting Standard (AS) 28, ‘Impairment of Assets’, specifies the requirements relating to impairment of assets. Intangible Assets 521 recognised as an expense when it is incurred. For example, expenditure on research is always recognised as an expense when it is incurred (see paragraph 41). Examples of other expenditure that is recognised as an expense when it is incurred include: (a) expenditure on start-up activities (start-up costs), unless this expenditure is included in the cost of an itemof fixed asset under AS 10. Start-up costs may consist of 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);
27 May 2008
PREL. EXP. CAN BE WRITTEN OFF IN 10 YEARS. THIS IS WHAT IS SAID UNDER AMORTISATION PERIODUNDER AS 26 ALSO AS STATED BY SRI VINEET. SEC 35 D OF IT ACT ALSO STATES THE SAME. R.V.RAO
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