Preliminary expenses

Sir,

I am Finalizing the Accounts of some private limited company and that company was incorporated during the previous year and there are some priliminary expenses so what is the accounting traetmnet of the preliminary exp. Whether I will write off whole expense in the same year of whether I will W/o 1/5 as per IT Act. or if there is deffred tax creation then tell me Accounting entry for the same.... Please give me suggestion fast

Replies (2)

Hi,

It is recommended to w/o in 5 yrs so that ur books reconcile with ur IT computation. Entries are as follows:-

 

1. Preliminary Expense - Dr (Current Asset)
                             To Cash\Bank
                             
2. Preliminary Expenses Written Off - Dr (Indirect Expenses)
                                        To Preliminary Expenses
 
3. Profit & Loss A\c. - Dr
                To Preliminary Expenses Written Off
 
 
For any further query PM or mail us.
 
anubhavjain @ ajhco.in
 
AJH & CO.
Chartered Accountants
 

 

Thank You sir

So I'll not create any DTA ?????

 

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