preoperative expenditure ??

ne replies ??

these are the preoperative expenses and will be written off in 5 years

every year 1/5th of the expenses will be taken to p&L and remaining will be in B/S

for example if preoperative exp are Rs 5000, we will first divide it by 5 and then each year debit 1000 in P&L and remaining amount will be shown in the asset side of B/S under the head misc. exp.     For the first year Rs 4000 will be shown in the asset side and in 5 years all the expenses will be charged from P&L.