Prior Period expenditure

1. Preliminay Exp. -----------Dr. (under current assets)

                            To Cash/Bank/Party(promoters)

2. Profit/Loss a/c  Dr.( Indirect Expenses)

                   To Preliminary Exp. A/C

Those expenses which incurred to formation and flow of the company. For example advertising exp.,issuing shares ,producing prospectus etc. which has not yet been written off are shown in the balance sheet of a company because as per schedule vi of the companies act. These are expenses will be come under nominal account.

Thanks for your early suggestion.

I just want to bring in your kind attention that said expenses are not preliminary exp or foundation exp.  These are the expenses related to a particular project of the company for getting approvals, noc , licence for developing the project etc. And the query is not for account treatment or entry, I want to know that we can show these expenses in the books of account or not ?

kindly guide in this situation.

AS 5- prior period items are income or expenses which arise in the current period as a result of errors or omissions in the preparation of financial statements of one or more prior periods.

separate disclosure of nature and amount ,by way of note , is required to ensure that impact on current profit or loss can be clearly perceived.

the expense of 1.5 crore will be accounted for in current year by debiting relevant expense account and crediting promoters account. bank account of company will not be affected as payment is made thru promoters personal account.