PRELIMINARY EXPENSE NOT WRITTEN OFF

whether preliminary expense not written off is deducted from reserves and surplus or is it shown under asset side?
Replies (2)
Quick Summary
Preliminary expenses should be shown on the asset side of the balance sheet, not deducted from reserves and surplus. They must be written off within five years and are allowable expenditures under Section 35(d) of the Income Tax Act. The accounting entry involves debiting the preliminary expense write-off account and crediting the preliminary expense account, with the write-off being reflected in the profit and loss account.

You have to show under asset side , It is to be written off within 5 year , also allowable Expenditure as per section 35(d) of the Income tax act .

When you write off at the end of the year pass entry
preliminary expense write off A/c Dr
To preliminary expense A/c Cr
( preliminary expense write off )

write off from profit and Loss account.
Preliminary expenses should be reported under current assets

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