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Abhijeet Singhal (Senior Engineer)     09 June 2011

How to show Losses accumulated in balance sheet

Hello,

I am doing a project with a company which is to start its business in coming months. I am preparing its balance sheet for coming years for project and financial planning. In the first two years, it is estimated that they are going to be incurring losses and from third year only they will earn some profit. 

My queries are:

How to show the loss incurred on the balance sheet? Under which head?

Does the company will be able to reduce its tax liability in the third year because of the losses earned earlier? If yes, how it could be done?

Looking forward to the responses..

thanks

Abhijeet Singhal



 1 Replies

Edwin

Edwin (Article)     09 June 2011

The  expenses upto the starting of the company will be shown under the head Miscellaneous Expenditure - Prelimnary Expenses




And the loss upto the third year will be accumulated in the Profit & Loss Account
You will be able to claim set off of  the loss of previous years


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