Dear Expert,
Please confirm what is the treatment under new Indian Accounting standards for pre operative and preliminary expenses. Does it come under IAS 38.69? or some other IAS.
Please explain the treatment.
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Query preoperative expenses
Replies (1)
I think your query is regarding capitalization of Pre operative exp. It depends on the nature of expenses. If these expenses are of general nature to start a business then these can not be capitalized. However, if these expenditure can be related directly to construction of PPE these can be capitalised if meet the criteria of IAS 16.
General preoperative expenses do not meet the definition of an intangible asset also in line with IAS 38 as they are not identifiable, i.e.:
- They cannot be separated and sold/transferred, and
- They do not arise from contractual or other legal rights.
Thanks,
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