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Pre operative expenses

Others 317 views 3 replies
what is the treatment of pre operative expenses sir.. pls tell me
Replies (3)

They cannot be capitalised but they should be expensed. 

 

IAS 38 and

start-up, pre-opening, and pre-operating costs [IAS 38.69]

INDAS 38 

Examples of expenditures that are not part of the cost of an intangible asset are:
(a) costs of introducing a new product or service (including costs of advertising and promotional activities);
(b) costs of conducting business in a new location or with a new class of customer (including costs of staff training); and
(c) administration and other general overhead costs.

 

I finally found the standard for this after scanning:

expenditure on start-up activities (ie start-up costs), unless this expenditure is included in the cost of an item of property, plant and equipment in accordance with Ind AS 16. Start-up costs may consist of establishment costs such as legal and secretarial costs incurred in establishing a legal entity, expenditure to open a new facility or business (ie pre-opening costs) or expenditures for starting new operations or launching new products or processes (ie pre-operating costs).

https://www.mca.gov.in/Ministry/pdf/IndAS38_2019.pdf

 

I was under the wrong and old concept that start up costs are capitalised. This is new for me as well,

 

 


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