I have incurred expenses for drafting of MOA & AOA and other relevant expenses for incorporation of a new company via my company cash. How do I make entries for the same?
Preliminary Expenses A/c Dr
To Cash
or
Directors A/c Dr
To Cash
Sangam Pakuwal (Student/Article) (39 Points)
21 May 2023I have incurred expenses for drafting of MOA & AOA and other relevant expenses for incorporation of a new company via my company cash. How do I make entries for the same?
Preliminary Expenses A/c Dr
To Cash
or
Directors A/c Dr
To Cash
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
Above mentioned are preliminary expenses of New company
however New Company and Your Company are two different companies, and you paid Cash from your Company to New Company for preliminary expenses , is it Correct ?. please Clarify.
Sangam Pakuwal
(Student/Article)
(39 Points)
Replied 21 May 2023
Yes Sir, that's correct. I paid Cash from my company to the new company yet to be fored.
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
Sangam Pakuwal
(Student/Article)
(39 Points)
Replied 21 May 2023
Dear Sir,
The new company is going to pay back the money. And I am aware of Section 43(A)(3) under Income tax act.
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
Sangam Pakuwal
(Student/Article)
(39 Points)
Replied 21 May 2023
Sir.. I am not aware of such restrictions. Would you please let me know the provisions relating to it? But as far as I know, there are no any such restrictions.
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
Dear sangam pakuwat .
I am also not aware of perticular section, but you confirm with others, I will pass entry no problem.
in your books entry will be ( suppose your Company is A Ltd )
New Company A/c Dr
To Cash A/c Cr
( payment for preliminary expenses of new company)
New Company A/c will be under Loans and Advance ( Asset) , because new company will return you back in future .
------------------------------
In the books of New Company
Preliminary expenses A/c Dr
To Company A Ltd A/c Cr
( preliminary expenses paid by A Ltd )
Company A Ltd A/c will be under Trade Creditor, (Current Liability) .
preliminary expenses under current Asset side and are supposed to write off with in 5 year. please confirm.
Sangam Pakuwal
(Student/Article)
(39 Points)
Replied 21 May 2023
Sir..
The question arises in my mind that how can I debit the new company if its not formed yet?
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
Then to whom you have paid ? It is preliminary expenses of new company so you can not debit to preliminary expenses .
Sangam Pakuwal
(Student/Article)
(39 Points)
Replied 21 May 2023
Sir
Paid directly to the consultants .
prasad Nilugal
( GST Practitioner & Accounts )
(14688 Points)
Replied 21 May 2023
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