The benefit of the preliminary expenses is long-term so it is treated as intangible asset as per AS-26 and shown in Balance sheet under Misc. assets. These expenses will be written off in 5 equal year installment in profit and loss A/c. You can also transfer whole amount in single year but for income tax purpose 1/5 of the amount will consider.
Accounting Entries: 1. Preliminary Expense - Dr (Current Asset) To Cash\Bank
2. Preliminary Expenses Written Off - Dr (Indirect Expenses) To Preliminary Expenses
3. Profit & Loss A\c. - Dr To Preliminary Expenses(1/5th)
Querist :
Anonymous
Querist :
Anonymous
(Querist)
10 June 2015
Thank you very much sir. Is it matching Concept for Writing off?
CAclubindia
