Commencement of business

Others 775 views 4 replies

Mohammed Salih K

Student

46 Points Joined November 2008

Hi,

I have a doubt regarding commencement of business

A, a public limited company, incorporated in April 2009,

They have appointed staff for their operation, taken building for its business, incurred various expenses like, travelling, salary, business promotion, telephone, production, etc.

But, actually they got Certificate of Commencement of Business only in September 2009.

Pls help me , how will account the aforesaid expenses

is it possible to incure expenses from the incorporation itself or whether only after commencement.

Is it not possible to account without commencement of business certificate, how will account the expenses incurred after incorporation till obtaining commencement certificate.

Awaiting an expert advice

Mohammed Salih K

Replies (4)

Rachit

Ca-Final Article.

565 Points Joined June 2010

to the best of my knowledge i agree with you that a company cannot incure any expense before certificate of commencement of business so the same shall not be allowed as business expense and i think it can be treated as preliminary expense.

Rachit

Ca-Final Article.

565 Points Joined June 2010

but not 100 % sure about the same........

SkDash

CS (Member) CWA (Final)

909 Points Joined February 2009

Shalih- expensed prior to incorporation is preliminary expenses and shall be amotised in the year of commencement of business (here year of commencement of business means actual commencement and not yr of getting certificate of commencement).

exp incurred after incorporation will be fully allowed as business expenditure and will be accounted accordingly. certificate of comencement will have to do nothing with the accounting.

This is my personal opinion. Others views solicited