What is the accounting treatment of expenses incurred for merger like solicitor' fees, registration fees, stamp paper charges? Whether it should be treated as Preliminary Expenses or should be charged to Profit & Loss A/c as merger expenses?
CA. Lakshmi Iyer (Chartered Accountant) (23 Points)
26 May 2008What is the accounting treatment of expenses incurred for merger like solicitor' fees, registration fees, stamp paper charges? Whether it should be treated as Preliminary Expenses or should be charged to Profit & Loss A/c as merger expenses?
Ankit kansal
(Professional)
(43 Points)
Replied 26 May 2008
Dear sir,
I think that merger expenses should be treated as preliminary exp because such exp are incurred for the purpose of expention of business and any exp which is incurred for the expention of business shall be deemed as preliminary exp.
Thanks
Ankit Kansal
Ameya Shah
(Service)
(43 Points)
Replied 26 May 2008
Share issue expenses including Stamp duty, BSE/NSE Listing fees and ROC registration fees can be adjusted against Securities Premium Account, net of deferred tax In addition to the above, Amalgamation expenses including financial advisory charges (professional services in context of valuation of businesses for amalgamation, determining compensation for minority), Professional Charges in connection with valuation of merger and other related expenses can be written off to the Profit and Loss Account.
I believe AS 26 does not allow to defer such expenses Refer AS 26 & Section 78 of companies act
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