Accounting Treatment - Fund raising expenditure

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This discussion explores the accounting treatment for expenditure incurred during additional share capital raising, like investment bank advisory fees. While some argue it should be charged to the Profit and Loss account, others question why it can't be offset against share premium. The consensus leans towards charging it to P&L, though accounting standards may allow for deferred revenue expenditure treatment over time.

divyanshu yadav

divyanshu yadav (Querist)

20 February 2020 Hi,

Please share thoughts on accounting treatment of expenditure incurred in connection with additional share capital raised. For instance, advisory services provided by an investment bank. Can this be adjusted against share premium or it should form part of P&L.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

20 February 2020 It should be part of p and l.

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Amol S Joglekar

Amol S Joglekar (Expert)

20 February 2020 since it is for additional share capital, you can charge it to Profit and Loss account.

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divyanshu yadav

divyanshu yadav (Querist)

20 February 2020 Please clarify why this cannot be charged against the security premium

Amol S Joglekar

Amol S Joglekar (Expert)

20 February 2020 income tax versus accountancy. They may NOT go hand in hand. The answer is based on income tax. As per the Accounting, you have the choice to treat it as deferred revenue expenditure to be charged to Profit and Loss account over the life of the expenditure. But share premium? Can you please share your views on this?

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