In case of public ltd company, while calculating time ratio which period should be taken for prior period? whether from financial year beginning to incorporation or from financial year beginning to commencement of business?
3 Replies
C.A. LINESH PATIL
(CA)
(910 Points)
Replied 28 September 2010
Financial year may began from from incorporation of a company.
also we may note that as per AS 26 in case of pre incorporation expenses and sum post incorporation expenses which are not in nature of capital expenditure has to be written off immediately even if a company has not started its business.and P&L A/c will show the loss.
hence in my opinion financial year starts after incorporation of profit.
manickam
(student)
(37 Points)
Replied 29 September 2010
Thanks for responding to my question linesh.. But in case of public ltd company it is entitled to commence the business only after receiving certificate of commencement of business right??
C.A. LINESH PATIL
(CA)
(910 Points)
Replied 29 September 2010
Ya you right but P&L can be prepared i already said even before start of business is P&L A/c will be prepared.
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