Accountin Treatment for Pre-operative expenses at the end of FY

AS 26:56a, it's an expense. 

Administrative like the example you have given is an expense because they are indirect expenses. after research costs are expensed, development costs are capitalised due to the economic benefit inflow and accurate measurability critea. As you know fixed assets are capitalised. But they are not operative costs. After the factory starts, all day to day operating expenses are expensed. 

Thanks for your clarity, as per the standard it is expensed by the end of fy

Dr. Preoperative expenses

Cr. Bank

This is a valid entry because even before the company construction started, capital is gathered. So in the trial balance include Dr. Preoperative expenses 100. In the cr. Balance put capital 1000. Then in bank put 1000.

This way, when you post the values in the financial statements, atbthe year end

Bank balance will be 900

Capital will be 900

Preoperative expenses will be 100 in the statements. If I come up with easy ways, I'll contact tomorrow

Paragraph 9.2 of AS 10,Administration and other general overhead expenses are usually excluded from the cost of fixed assets because they do not relate to a specific fixed asset. However, in some circumstances, such expenses as are specifically attributable to construction of a project or to the acquisition of a fixed asset or bringing it to its working condition, may be included as part of the cost of the construction project or as a part of the cost of the fixed asset.

Expenses incurred on formation of an entity cannot be said to be attributable to bringing an asset/project into existence and, therefore, cannot also be included as part of cost of fixed assets.

Now is it constructing project or building a factory? Treat it accordingly.