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.
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.
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
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 ?
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