Preliminary expenses accounting
This query is : Resolved
15 November 2016
if at the incorporation the share capital is Rs.1,00,000 in cash and preliminary expenses are 45,000. now I will show 100,000 under share capital and 100,000 under cash. then how should I book the preliminary expenses of 45000. how my balance sheet will get tally????
15 November 2016
Preliminary Exp will be reimbursed to those who have incurred such amount this reduces your cash balance by Rs. 45000 and the same need to be debited to reserve and surplus accoun and this will leads to reduction in liability side by Rs 45000 then your balancesheet will het tallied
15 November 2016
THEN NO NEED TO SHOW ANYTHING IN PROFIT AND LOSS ACOUNT
15 November 2016
As per AS 26 " Intangible Asset" Preliminary exp need to be expensed out as and when it is incurred. Therefore the compelete amount is need to be debited to P& L account which will lead to increase your losses or reduces the profit for the year and ultimately effects the reserve and surplus account in the balancesheet
15 November 2016
That is as per Sec 35 D of Income Tax act 1961, and need not to be followed for preparation of financial statements.
it need to be followed only for calculation of taxable income from PGBP .
it need to be followed only for calculation of taxable income from PGBP .
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