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Preliminary expenses treatment

work is worship (Service) (2728 Points)

29 October 2012

How will the ":Preliminary Expenses" in the revised Schedule VI be treated.

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6 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 29 October 2012

Should be disclosed in 'Other Current Assets' under the heading Current Assets.

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CA Apoorva Gaurav (CA) (368 Points)
Replied 29 October 2012

As per revised schedule VI

Preliminary and Per-operative expenses is to be shown under

Current Assets -> Other Current Assets

Presenation would be as under

Balance at the begiining of the accounting year XXX

Add: Addition during the year XX

Less: written off during the year XX (as debited in P/l, if any under the head extra ordinary items)

Balnce at the end of the accounting year XXX

work is worship (Service) (2728 Points)
Replied 29 October 2012

Hi Apporva

Are you sure it would be under "other current assets".

As i had one article published in our journal relating to diff between old and revised schedule where in it was mentioned that revised schedule was a move towards IFRS. and one of the difference was that Preliminary expenses would be now directly written off in P & L in the year of expense so as to follow IFRS.

Read the attached article.

Attached File : 58068 1077668 distinctive features of revised schedule vi and earleier schedule vi.pdf downloaded: 275 times

CA Roshan Jha (CA (Practice)) (858 Points)
Replied 30 October 2012

As per the AS-26 revised, normally preliminary exp. are written off, unless they meet some crieteria to be recognised as assets. Hence try to write off the preliminary exp. fully in the year in which they are incurred.

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CA Dhiraj Kumar (Chartered accountant) (346 Points)
Replied 30 October 2012

as per revised shedule vi ,preliminery expenses should be shown under profit and loss a/c for better understanding of a normal person because if it is shown in balancesheet then a normal person will understand as profit,hence if your client is agree for this writeoff of preliminery expenses then shown under profit and loss a/c otherwise will shown under other current assets.

thanks and regards

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*RENU SINGH * (✩ §m!ℓ!ñġ €ม€§ fℓม!ñġ ђ♪gђ✩ ) (21627 Points)
Replied 30 October 2012

Originally posted by : CA Roshan Jha
	As per the AS-26 revised, normally preliminary exp. are written off, unless they meet some crieteria to be recognised as assets. Hence try to write off the preliminary exp. fully in the year in which they are incurred.