expenditure

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 June 2011 Some expenditure had been done in respect of opening a business of a company before incorporation of the company. Please tell me, how to treat those expenditures in books of accounts? And which entry have to pass?

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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05 June 2011 Other than preliminary expenditure related to formation of company other expenses can not be related to incorporated company as on date.. so other than preliminary expenditure you can not claim these type of expenses

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2011 So these expenses are purely loss for the owner?Then what is pre operative expenses?what does it mean?

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Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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06 June 2011 Pre operative means before operation not before company incorporation. if you want to take this expenses you have to make a agreemnt for this and the party either you or other will be treated as creditor for this expenses, but hard to get benefit in Income tax

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2011 As per entity concept the owner will be the creditor of the business?If the owner will want to show that exp. in books of accont in which manner he has to show?
Another matter is how to show these pre-operative exp. in books of account?

Pankaj Gandhi Jaiswal

Pankaj Gandhi Jaiswal (Expert)
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06 June 2011 Pre Operative Expenses Dr
To Creditor ( Who has paid this exp )

But hard to get benefit in Income Tax.
And this should be done with proper agreement that these expenses made purely for this company and through this expenditure company will be benifitted.

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