Financials
This query is : Open
VINITHA RAJESH
(Querist)
15 November 2011
Hi,
Please give your comments and suggestions for the case given below:
A company is preparing its financials for the first year. They have not commenced operations yet. Therefore the company is proposing to capitalize its expenses as pre-operative expenses to be written off from the year of commencement of operations. All expenses including depreciation on fixed assets is transferred to pre-operative expenses under miscellaneous expenditure. The company will not have Profit & Loss Account for the year.
Deferred taxation effect is not arising here. This will be considered with retrospective effect from the year of commencement of operations.
Is this procedure correct.
Please give your comments and suggestions for the case given below:
A company is preparing its financials for the first year. They have not commenced operations yet. Therefore the company is proposing to capitalize its expenses as pre-operative expenses to be written off from the year of commencement of operations. All expenses including depreciation on fixed assets is transferred to pre-operative expenses under miscellaneous expenditure. The company will not have Profit & Loss Account for the year.
Deferred taxation effect is not arising here. This will be considered with retrospective effect from the year of commencement of operations.
Is this procedure correct.
JIGAR DALAL
(Expert)
17 November 2011
Yes Procedure is correct.
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