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Q. > Please Help: Accounts Query
What is treatment of preincorporation expenses in financial statements
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Dear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated. They are to be fully written off as per AS 26 whereas u/s 35D of IT Act, they are to be amortised in 5 years equally thereby giving rise to deferred tax asset.
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Dear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated. They are to be fully written off as per AS 26 whereas u/s 35D of IT Act, they are to be amortised in 5 years equally thereby giving rise to deferred tax asset.
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Dear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated. They are to be fully written off as per AS 26 whereas u/s 35D of IT Act, they are to be amortised in 5 years equally thereby giving rise to deferred tax asset.
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Dear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated. They are to be fully written off as per AS 26 whereas u/s 35D of IT Act, they are to be amortised in 5 years equally thereby giving rise to deferred tax asset.
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Dear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated. They are to be fully written off as per AS 26 whereas u/s 35D of IT Act, they are to be amortised in 5 years equally thereby giving rise to deferred tax asset.
answered Aug 05, 2014 by AKHIL MAHESHWARI , Bhilwara
Sorry for unexpected recurring replies due to network error. I want to add to my answer that to comply AS 26, the same would be charged to Statement of Profit and Loss as other expenses. And to comply with IT Act amortisation, for remaining amount to be amortised, deferred tax asset would be created in Balance Sheet.
answered Aug 25, 2014 by pradeep singh , East Delhi
pre incorporation exepences are to be recorded under the
head preliminary expences& losses at the assets side of the
balance sheet.these are deductable (to be set off)in the 5
subsequent years from the year of establishment. of
business.
Experts Panelist
Comments
AKHIL MAHESHWARI
05-Aug-2014 , 06:17:53 pmDear Kundan, Pre-incorporation expenses are such preliminary expenses incurred to get the company incorporated.
kundan thakur
07-Aug-2014 , 12:46:18 amThanks sir