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Preliminary expenses treatment

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Aarthi.P asked over 2 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?

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Aarthi.P commented over 1 year ago

Thank you all for replying

2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Urmil answered over 2 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

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10153151 616441875107752 6844265409377433766 n CAKART answered over 2 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

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SONIYA commented over 1 year ago

2. profit & Loss A/c-------Dr To preliminary Expenses written off A/c not 2.Profit & Loss A\c. - Dr To Preliminary Expenses

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