Can pre-operative expenditure include expenses like advertisement, salaries, printing and stationery, rent, etc.? Can they be capitalized?
Deepa Mulchandani (Article Assistant) (27 Points)
07 April 2011Can pre-operative expenditure include expenses like advertisement, salaries, printing and stationery, rent, etc.? Can they be capitalized?
vignesh
(B-com CS CA-Final CFA-level 1 candidate)
(1053 Points)
Replied 12 April 2011
Pre-oprative exp is expenses during construction and hence relate to bringing the assets to operating condition. I am not sure if this can be debited to R & D expenses. Primarily pre-operative expenses would relate to payment of salary, wages (indirect), travel expenses, communication expenses, consultancy charges and normal oprating expenses. Hence the question of R & D Expense would have to be decided based on the nature of expenses.
they can b capitalised by apportionment/allocation to assets which are the subject matter of operation..
for more info i would suggest go through AS-26.
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