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Prior Period Expenditure

NANDURI RAVI SURYA NARAYANA MU (ACCOUNTANT) (194 Points)

16 March 2009

Can any body advise to me, what i can do while i am having prior period expenses in my T.B. The expensses was not recognised earlier. While i prepare P&L where i noted that Prior Period expenses. What is the role in p&l account of perior period expenses. In the corner of income tax also. Theses expenses recognised by the Assessing Officer, because it was not effect of our profit figure. so is it deductable item or not. Kindly guide me.

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6 Replies

(Guest)

NO prior period expenses is not deductible under Income Tax Act, 1961....

In books of Accounts it is shown below the line as per AS-4...

>> Vipul Garg

gokul (Accountant) (126 Points)
Replied 17 March 2009

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

Disclosure requirement as per AS 5 :

The nature and amount of prior period items should be separately disclosed in the statement of profit and loss in a manner that their impact on the current profit or loss can be perceived.

Prior period items are normally included in the determination of net profit or loss for the current period. An alternative approach is to show such items in the statement of profit and loss after determination of current net profit or loss. In either case, the objective is to indicate the effect of such items on the current profit or loss.

CA SUDIPTA SINHA (Commerce Coaching- Accounts Cost FM) (735 Points)
Replied 20 March 2009

the prior period items are seperately disclosed in the p/l a/c as per AS 5. the prior period items are deductible expenditure though it may relate to the past year. because the objective of inclusion of prior period expenses is to find out the present profit correctly......

CA SUDIPTA SINHA (Commerce Coaching- Accounts Cost FM) (735 Points)
Replied 20 March 2009

CA Deepak Chhabra (Practice) (66 Points)
Replied 26 March 2009

The purpose to find out the prior period expenditure in the current accounting year is to see the impact of the expenses on the current year profit & it is to be shown in the notes to accounts

Vikram (CA) (158 Points)
Replied 26 August 2009

No doubt in taxation we have to show it seperate but under The Company act or Accounting standard it is not mandatory to show PPI or PPE on the face of P & L account . It can be shown in notes to account and include the same in respective expenses. Mr. Deepak U want to say the same ?