Please refer to Para 56 of AS 26 on intangible assets
Can we show preliminary expenses in assets side according to this AS
link to text of this AS:
ANSHUL AGARWAL (STUDENT) (141 Points)
24 August 2011Please refer to Para 56 of AS 26 on intangible assets
Can we show preliminary expenses in assets side according to this AS
link to text of this AS:
Bhaskar Unnikrishnan CPA CMA
(Accounts / Administration)
(414 Points)
Replied 24 August 2011
Dear Anshul,
As per attached AS 26, preliminary expense needs to show on asset side of balance sheet only if it spend on acquisition of any fixed asset. All other expenses such as legal and other start-up cost should be expensed in the period as it incurred. Below discussion in same website would be interesting for you.
/forum/details.asp?mod_id=89169&offset=1
Regards,
Bhaskar Unnikrishnan
Bhaskar Unnikrishnan CPA CMA
(Accounts / Administration)
(414 Points)
Replied 24 August 2011
Refer to below link as well. It can be capitalized and shown on Balance sheet as per US GAAP.
Dhanabal Ramasamy
(CHARTERED ACCOUNTANT)
(105 Points)
Replied 26 August 2011
Hai........
Preliminary Expeneses should not be recognised in the balance sheet as and asset. Because there will not be any future economic benefit flowing into the company. ICAI has also issued guidance notes regarding this which recommends preliminary expenses to be expenses in the year it incurred.
But only in IT act it is allowable in five equal installments.
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