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Preoperative expenses

NILA REJESH P (Chartered Accountant) (815 Points)

07 August 2013

What is the classification and adjustment of different Preoperative expenses in books of accounts of company?

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Deepak Gupta (CA Student) (15922 Points)
Replied 07 August 2013

In accordance with paragraph 56 of AS 26 such expenditures should be expensed by way of a charge to the profit and loss account in the period in which these are incurred. For this purpose, profit and loss account will have to be prepared by the company even before the commencement of commercial operations.

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