Aarthi.P
asked almost 3 years ago
Is it mandatory to write off preliminary expenses in the first year itself as per AS-26 .? If it is amortised over 5 years., is it correct to show the unamortised amount as Current assets?
Thank you all for replying
Urmil
answered almost 3 years ago
The benefit of the preliminary expenses is long-term so it is treated as intangible asset and shown in Balance sheet under Missilinous assets. These expenses will be written off in 5 equal year instalment in profit and loss A/c. you can also transfer whole amount in single year but for income tax purpose 1/5 of the amount will consider. Accounting Entries: 1. Preliminary Expense - Dr (Current Asset) To Cash\Bank 1.Preliminary Expenses Written Off - Dr (Indirect Expenses) To Preliminary Expenses 2.Profit & Loss A\c. - Dr To Preliminary Expenses
CAKART
answered almost 3 years ago
** Preliminary expenses treatment. ------------------------------- ** The benefit of the preliminary expenses is long-term so it is treated as intangible asset and shown in Balance sheet under Missilinous assets. These expenses will be written off in 5 equal year instalment in profit and loss A/c. you can also transfer whole amount in single year but for income tax purpose 1/5 of the amount will consider. Accounting Entries: 1. Preliminary Expense - Dr (Current Asset) To Cash\Bank 2. Preliminary Expenses Written Off - Dr (Indirect Expenses) To Preliminary Expenses 3. Profit & Loss A\c. - Dr To Preliminary Expenses
2. profit & Loss A/c-------Dr To preliminary Expenses written off A/c not 2.Profit & Loss A\c. - Dr To Preliminary Expenses
