16 September 2008
Dear Sir A trading company was incorporated on 1.4.2005 with prelims exp of Rs 30000/=. For year ended on 31.3.2007 pre operative exp as under :- 1> Salry 30000 2> Travelling 55000 3> misc exp 15000 Fixed assets- Computer 60000, Furniture 20000, Office block 300000 company statrted trading business on 1.4.2007. Please advice , how to ammortise or capitalise pre op exp Rs 100000/=
17 September 2008
Preoperative expenditure related to preparing the company to establish itself can be capitalised on a logical basis including the ratio of acquisition cost.
01 October 2008
If there are no fixed assets, then the only way is to carry it over to be adjusted in future profits. The tax authorities will seek to apply 35D.
CAclubindia
