Our Company started in Dec09.
Product Launch ceremony was in Mar May10
And Sale will start from July 10
Till what date the expenses will be treated as Pre-Operational expenses??
1 Replies
Varun.T.K
(CA Final, CS Executive)
(365 Points)
Replied 30 May 2010
Pre-operation expenses refers to those expenditure prior to the commencement of operations of the business. In the above case, the company commenced or was incorporated in December 2009. Even though the product launching ceremony was started in March 2010, it is deemed that the business would have started its operation, since it was already incorporated thus acquiring a legal identity.
Thus, pre-operation expenses is to be treated from the date of activities for promotion of business to the actual incorpration of business.
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