Income earned before commencement of business.

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2012 what is the accounting treatment of income earned before commencement of business?

during my audit i observed that co. earned rs.7890000/- huge fixed rate of interest from FDR, before commencement of business.

CA Kishore Tallam

CA Kishore Tallam (Expert)
Follow

14 April 2012 It depends on whether tat interest is earned out of equity funds deposited or loan funds deposited. Also it depends upon whether any project is going on in the company and whether the additional funds for the project are invested in FD or not.

CA Kishore Tallam

CA Kishore Tallam (Expert)
Follow

14 April 2012 Irrespective of the accounting treatment, the interest income has to be offered for taxation.

Upgrade to CAclubindia Pro. Subscribe Now!