pre incorporation profits

In case of public ltd company, while calculating time ratio which period should be taken for prior period? whether from financial year beginning to incorporation or from financial year beginning to commencement of business?

Replies (3)

Financial year may began from from incorporation of a company.

also we may note that as per AS 26 in case of pre incorporation expenses and sum post incorporation expenses which are not in nature of capital expenditure has to be written off  immediately  even if a company has not started its  business.and P&L A/c will show the loss.

hence in my opinion financial year starts after incorporation of profit.

Thanks for responding to my question linesh.. But in case of public ltd company it is entitled to commence the business only after receiving certificate of commencement of business right??

Ya you right but P&L can be prepared i already said even before start of business is P&L A/c will be prepared.

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