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Categories >> Accounting >> Accounting AllOther


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What is the treatment for PRELIMINARY EXPENSES?
 Question Submitted By :: Accounting-AllOther
I also faced this Question!!     Answer Posted By  
# 1
This is the expenses,which incurred for Formation and flow
of the comany..The expenses can include the Cost of
producing Procpectus,issuing shares and advertising

Note:-What ever i gave example that is belong to shares,
These can be belong to assets also....
Is This Answer Correct ?    111 Yes 28 No
# 2
Priliminary expances are kind of huge expences(Ex.- project appraisal,
documentation, legal charges,cunsultancy fees etc.) which occured before the
business started functing. These expences are for the standing of business unit
and off course, the benefit of which will be ripe continuously in future. It has a
special nature of an asset in financial statements and as per prudent accounting
principal should be write off in P&L A/c in a defferd way over the years.
Is This Answer Correct ?    90 Yes 18 No
Narendra Kumar
# 3
Preliminary expenses are those expenses which are paid
before starting of a business unit
Is This Answer Correct ?    78 Yes 14 No
# 4
Preliminary expenses, which incurred for before
commencement of business. For setting up of any undertaking
or business (Preparation of feasibility report, project
report or for conducting market survey or any other survey
or engineering services relating to the business and Legal
charges for drafting any agreement for setting up or for
conduct of any business).
For Income tax purpose the following is the permissibe
(a)In case of company, 5% of Cost of Project or Capital
(b)In case of any other business, 5% of the Cost of Project.
It will be allowed as deduction in 5 equal installments.
Is This Answer Correct ?    65 Yes 4 No
G. Shanker
# 5
This is the expenses, which incurred for Formation and flow
of the comany.The expenses can include the Cost of
producing Prospectus, issuing shares and advertising
Is This Answer Correct ?    38 Yes 12 No
# 6
Preliminary expenses which those exepenses during at the
time of formation of a new company such as preparation of
feasibility report, survey exp., preparation of memorandum
and Articules of Association, legal fees, advertisement
exp. etc.
Is This Answer Correct ?    27 Yes 5 No
Ashwni Kumar Swain
# 7
prelimnary expences is a expences which spend before the
business start (example,legal exp.,office making exp.)
Is This Answer Correct ?    26 Yes 7 No
Mohd.nadeem Ansari
# 8
I Dont Know anything about Peliminary expenses 
Is This Answer Correct ?    34 Yes 22 No
Shradha Singh
# 9
Preliminary expenses are the expense mhich are paid in the
processing of company formulation. in other world they are
paid for bringing the company into existance.
As these expenses
1)are huge in amount,
2)are nonrecurring and
3)are not related with the day-today opretions
therefore it is not fair to treat it as revenue
expenditure.The total amount paid for such expenses are
first capitalised and shown in the balance sheet.thereafter
from this some portion is written off each year.
Is This Answer Correct ?    14 Yes 3 No
Ramesh Rajani
# 10
this is the expences that has been spend before the
business start Example legal exp.
Is This Answer Correct ?    10 Yes 5 No
Mohd. Nadeem

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