Ad Free CAclubindia and Daily Updates on your Mobile. Subscribe Now!

Question for Everybody?

CA.Sonia (professional) (517 Points)

30 March 2010

If a company has started its trial run operations-

!. Do all the expenses need to be captalised till the operation is formal?

2.Any expenses which are to be charged to profit and loss a/c?

Reply
Follow
Share

9 Replies

laukesh (2) (21 Points)
Replied 31 March 2010

upto trail run all the exp capitalise , & any income from this shall be deduct

Upgrade to CAclubindia Pro. Subscribe Now!

(Guest)

all the exp. upto trail run are capitalised and any income like any govt. grants recd. or any type of discount and rebate need to be deducted...

Amir (Learner) (4016 Points)
Replied 31 March 2010

Dear Mam,

Till the commencement of commercial production/activities, ALL EXPENSES ARE TO BE CAPITALIZED.

Pradeep Sharma (student) (114 Points)
Replied 31 March 2010

Dear Mam

All the expenese are to be Caplitalised till the normal routine bussiness.

if there is any income toooo then it sholud also be capatilised

Mohan (Accounts Mgr) (209 Points)
Replied 31 March 2010

To the best of my knowledge...

(i) Any expenditure can not be charged p&L account and the same shown as "Pre-operative expenditure" in the Balance sheet and can be write off over a period after commencement of the business.

(ii) The Depreciation is to be shown separately and charged to P&l account, since it is mandatory.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

CA Devender Chauhan (Group Financial Accountant) (1526 Points)
Replied 31 March 2010

Originally posted by : mohan
	To the best of my knowledge... (i) Any expenditure can not be charged p&L account and the same shown as "Pre-operative expenditure" in the Balance sheet and can be write off over a period after commencement of the business. (ii) The Depreciation is to be shown separately and charged to P&l account, since it is mandatory.

agree with mohan

nitin (C.A. Final 2nd group) (58 Points)
Replied 31 March 2010

Originally posted by : mohan
	To the best of my knowledge... (i) Any expenditure can not be charged p&L account and the same shown as "Pre-operative expenditure" in the Balance sheet and can be write off over a period after commencement of the business. (ii) The Depreciation is to be shown separately and charged to P&l account, since it is mandatory.

yes this is the to th point answer. agree with mohan

CA.Sonia (professional) (517 Points)
Replied 31 March 2010

Hello to all and thanks for answering but want to know if the project work is till continuing and the deadline given to the bankers from whom the loan is taken is 31st march but the formal operations will start from may?

!.What should be done expenses should be capatalised till march or May?

2.How to write off the expenditure i.e For how many years?

VINEET (learner) (53 Points)
Replied 02 April 2010

Trial period Expenses Should be capitalise.it should be start from the date of when the product was invented till the date of approval or manufacturing of the product