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Srinivasu (article) (71 Points)

09 June 2008

hi friends i need information about capitalisation of preoperative expenses and is there any basis for trasfering these expenses to Assets

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7 Replies

ABHISHEK AGRAWAL (CHARTERED ACCOUNTANT) (31 Points)
Replied 09 June 2008

I THINK ,

PREOPRATIVE EX. IS THE NATURE OF PRILIMINARY EXP. & IT CAN NOT BE CAPITAL..... IT SHOWN IN BALANCE SHEET AS FICTITIOUS ASSETS... & IT CAN BE ONLY SET OFF

DEBA PRATIM GHATAK (Chartered Accountants) (0 Points)
Replied 09 June 2008

Preliminery & preoperative expenses are accumulated for write off against future incomes as & when the company starts operation. There is no case of capitalisation or apportioning to fixed assets

Srinivasu (article) (71 Points)
Replied 09 June 2008

in this case preoperative expenses incurred before opening branch this expenses like stipend, advertisement, salaries, interest , security charges what is treatement in financial statements

Vishwanath Achari (CA ) (35 Points)
Replied 09 June 2008

Hai

Preoperative expenses are those expenses which are incurred between the date of incorporation and date of commencement of commercial Production, hence such expenses are to be capitalised with regards to the specific asset eg: is the loan is borrowed to construct an asset or to purchase an asset the interest is to be treated as per AS 16 "Borrowing costs" and to be capitalised to the specific asset if such borrwoings are in genreal apply weighted average rate of interest to capitalised.

However if the expenses are in general in other than interst on borrowings and if it is in the nature of Research and Development then apply AS 26 "intangible assets" and treat as per the standard which gives different treatment to both Research expenses and development expenses.

Kothari Mehul (14 Points)
Replied 09 June 2008

I am currently in NYC for my job. I want to apper Nov08 exam, if some body can provide me breif notes for Corp & Allied Laws (with Latest Amendment) it would be highly appreciated..... & also latest amendment for 1st Group only.

Thank you very much

Sanjog R. Jain (CA Final Appeared) (48 Points)
Replied 10 June 2008

Dear Friend;

I think it is useful for you.

Regards

Sanjog R. Jain

Attached File : 23 company law notes ca final.pdf downloaded: 203 times

Pranav (V) (63 Points)
Replied 20 June 2008

In my opinion, If the pre operative expenses is in the nature of Interest during the construction of Machinery, it definately be capitalised as per AS 10. And the same will be accapted by the I T Department