faisal pari (Accountant) (46 Points)
19 October 2020Hi,
We are going to start a new supermarket, but we almost spend 10 lakh Rs Pre operating expenses like (Building rent, Construction, AC, Office work, Supermarket equipment fittings, plumbing,electrical works,Tiles work, glass, Interior works........etc.
Kindly advise me how can i treat all expenses before starting the supermarket. now i just entered all expenses in Preoperating expenses.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 19 October 2020
you have these expenses from different standards. I’m sure this will sort out your query
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 19 October 2020
The above is for IndAS and this is for AS
https://www.caclubindia.com/forum/treatment-of-pre-operative-expenditure-40442.asp
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 23 October 2020
Hi Mr. Faisal, please follow the steps below:
Building rent- revenue in nature and must be expensed
Construction- include it into the cost of fixed assets
AC- include it into cost of fixed assets
Office work- furniture & fittings? Include into cost of fixed assets
Shop fitting equipment- include into cost of fixed assets
The other following expenses above- add them to the cost of fixed asset.
now things are simple here, apart from building rent which is an expense, calculate the total amount for the rest of the items, and name them as total PPE or Fixed assets, and recognise them on the balance sheet.
I know, if it is a start up, there are no assets. So, you will have to recognise all of these expenses into class of assets- here, Fixed Assets in balance sheet for the first time. And then start depreciating them.
Note: there is no need for you to show them as an intangible assets because you will recognise all assets as per PPE standard and costs related to it.
An asset is capitalised, always! Please let me know if you got it.
I repeat- what is pre operating expenses to you, are assets and costs directly attributable to construct that asset. So, I will recognise them accordingly on the balance sheet.
faisal pari
(Accountant)
(46 Points)
Replied 30 October 2020
hi sir, thank you very much.
If you don't mind, can u pls provide your whatsapp number, still i have doubts about it. thank you or can u pls text me 9061702832
sabyasachi mukherjee
(27579 Points)
Replied 02 November 2020
sabyasachi mukherjee
(27579 Points)
Replied 02 November 2020
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 November 2020
I was trying to be funny, sorry for any offence. @ Faisal I don’t have wats app Sir, that’s why I couldn’t reach out and soon I’m planning to start some earnings and hence cannot come to the forum anymore,
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