Preliminary expenses w/off

Preliminary expenses should be shown in balance sheet assets side and has to be w/off for 5 years. Is the same provision also exist in revised schedule III or balance sheet as per ind as, or it has to be w/off in 1 year only?? and where it should be presented in balance sheet prepared as per ind as??
Replies (1)

I dont think you have adequate knowledge that in AS 26 also preliminary expenses were to be written off in 1 year off occurance if they are not qualifying to be an Intangible asset. Similarly on the same lines there is IND AS 38 which is also on Intangible assets which says follows:

"In some cases, expenditure is incurred to generate future economic benefits, but it does not result in the creation of an intangible asset that meets the recognition criteria in this Standard. Such expenditure is often described as contributing to internally generated goodwill. Internally generated goodwill is not recognised as an asset because it is not an identifiable resource (ie it is not separable nor does it arise from contractual or other legal rights) controlled by the entity that can be measured reliably at cost."

"In some cases, expenditure is incurred to provide future economic benefits to an entity, but no intangible asset or other asset is acquired or created that can be recognised. In the case of the supply of goods, the entity recognises such expenditure as an expense when it has a right to access those goods. In the case of the supply of services, the entity recognises the expenditure as an expense when it receives the services. For example, expenditure on research is recognised as an expense when it is incurred (see paragraph 54), except when it is acquired as part of a business combination. Other examples of expenditure that is recognised as an expense when it is incurred include: (a) 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 preopening costs) or expenditures for starting new operations or launching new products or processes (ie pre-operating costs). (b) expenditure on training activities. (c) expenditure on advertising and promotional activities (including mail order catalogues). (d) expenditure on relocating or reorganising part or all of an entity."

After reading the above 2 paras one cold say that writing off ineligible expense would be in Year 0 itself.

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