Answer / mohd. nadeem

this is the expences that has been spend before the
business start Example legal exp.

Answer / syed mujtaba

Preliminary Expenses are of two Types

a) Cost of capital:Expenese on the building or purchasing
of Plant and machinery, land, Legal expenses, etc
b) Cost of capital employed:L:like issue of shares of any
kind like, bonus shares, equity shares, debentures or bonds

Allowed as Deduction

a) 5% of cost of capital or
b) 5% of capital employed whichever is more

and the qualifying amount is deductible in 5 equal
installemnts starting from the date the project is
completed or shares are issued

Answer / vishakha gandhi

those expenses are related to the company formation
expenses.those expenses are shoen in assets side in group
of miscellaneous exp. those expenses are written off upto
five years. each year 1/5 amt is written off.

Answer / shajimon m.v.

Priliminary expenses are those expense which are met prior
to the formation of a company or firm. These expense are
having a non recurring feature and also not related to the
day to day operation of the company. The amount expended
towards: preparation of Feasibility Report, Prospectus,
Memmorandum & Articiles of Association, issue of shares,
conducting Marketting Survey , Legal expense for
documentation and huge advertisements. These expenses are
to be shown in Balance sheet asset side as "Priliminary
expneses" and a fixed percentage of the total amount can be
written off every year by debiting to the Profit & Loss
account.

Answer / ca.g.srinivasan

Preliminary Expenses should be written off fully, if they
are incurred, after the date of AS 26 becoming mandatory.
Expenses incurred before the date of AS 26 mandatory to be
written off over a number of years as origninally
contemplated

Answer / inayat khan tareen

preliminary expenses are those expenses which incurred
before starting or managing a new business such as
registration fee, preparation of article and memorandum of
association, prospectus fee, legal charges etc.

Answer / ahmad

Prelimanary expenses are the expenses ocurred in the start
or the formattion of a company. It is recorded in asset
side of the balance sheet.

Answer / baalaji05

PRELIMINARY EXPENSES IS SHOWN ON ASSET SIDE OF THE BALANCE
SHEET. AND NOT IN PROFIT AND LOSS ACCOUNT. YOU MUST CHECK
THE FINAL ACCOUNT CHAPTER ON THE ACCOUNTANCY BOOKS.

Answer / gautam tanwar

Priliminary exps are those exps which are incurred before
incorporation of organisation and for after incorporation
it includes exps for expansion or for new undertaking or
for issuance of shares.

Answer / pramod

Preliminary expenses are in the nature of expenses which is
incurred during formation stages of the Company & as per
IGAAP should be capatilised & Charge it off in next 10
years as per IT act.

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