Pre operative expenses

what is the treatment of pre operative expenses sir.. pls tell me
Replies (3)
Quick Summary
This discussion clarifies the treatment of pre-operative expenses. According to IAS 38 and INDAS 38, these costs, which include start-up, pre-opening, and pre-operating expenditures, cannot be capitalised. Instead, they must be expensed. The standard provides examples of costs that are not part of an intangible asset's cost, such as those for introducing new products or opening new locations.

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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