26 December 2012
Pre-operative expenses means those expenses done before the formation of the company.so it will be knows as a preliminary expenses and it will be capitalised in the books of accounts and proportionate deductible as per law. The entry should be passed as below:-
preliminary expenses a/c- dr.(Capitalised value) To.cash / bank a/c -cr. after that preli. expenses W/o-dr.(Proportion value) To.Preliminary Expenses-cr(Capilised)