In one company incurred expenditure before opening branch these expenditure like salaries, stipend, advertisement,Interest on loans, rent, security charges etc. these expenses are capitalised at the time of opening branch and the same is transferred to assets like furniture, plant and machinary etc is this procedure is correct if yes please give me source about the same
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preoperative expenses
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Pre-Operative expenses of Capital Nature are to be capitalised with the cost of fixed assets in relation to which they have been incurred. Whereras pre-operative expenses if Revenue Nature are to be charged against the profits of the company in they year in which business has commenced.
Hi
Check out the guidance note issued by ICAI in this regard
GN on expenses during the construction period.
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