Urgent query on precommencement expenses

Riddhi (CA Job) (34 Points)

16 June 2013  

Hi,

My query is if well established Company has started a business at new loaction (new branch i.e. only the expansion of  existing business) then what should be the treatment of  "Pre-commencement Expenses". 

Our CA suggested to capitalise all the precommencement expenses.

On the basis of his opinion, we started capitalising all expenses. Accountant has capitalised the expenses of snacks bill of labour, rent of the place and all miscellenous expenditures. Is this a correct treatment?

If it is to be capitalised then what should be the head of Account? And how it should be written off?

Please give me the reference of cases also.

Thanks in advance...