Pre-operative expenses

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VINITHA RAJESH (Querist)
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26 November 2010 Can anybody please explain the treatment of pre-operative expenses in accounts and the amortization procedure for the same

Aditya Maheshwari

Aditya Maheshwari (Expert)
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26 November 2010 In the books of accounts u have both options to write it off over a period of five years or write it off in one year itself.

All listed companies write it off in the year in which they are incurred and many non listed companies write it off over a period of five years.

For listed companies it is compulsory to write it off in the year in which they are incurred.

DTA can be made on the difference of written off as per books and allowable as per I. T. as in IT the same is allowable over a period of 5 years.

VINITHA RAJESH

VINITHA RAJESH (Querist)
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27 November 2010 Can we capitalize the pre-operative expenses similar to preliminary expenses to be written off in future years not exceeding 10 years as specified in AS 26.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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27 November 2010 write off in 5 years.

VINITHA RAJESH

VINITHA RAJESH (Querist)
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29 November 2010 Thanks. Please give me tha answer for this query also.

Would it be proper to write off the preliminary expenses and the pre-operative expenses after the company starts operations.
Till then can we capitalize all expenses relating to operations as pre-operative expenses

Aditya Maheshwari

Aditya Maheshwari (Expert)
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29 November 2010 It could be ur accounting policy but u can write off every years expenses to P &L a/c except if u are making a factory or something.