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Udit Kumar Sahu/aditya posted an Question
March 19, 2021 • 19:04 pm
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30 points
30 points
- UGC NET
- Commerce
Preliminary expense accounting treatment (along with accounting standards) and tax treatment and how it differ from companies act provision
preliminary expense accounting treatment (along with accounting standards) and tax treatment and how it differ from companies act provision
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Priya gulani
see if it helps you https://cleartax.in/s/amortization-preliminary-expenses
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Rucha rajesh shingvekar
As explained above the preliminary expenses can be written off within five years however as per Section 35 of The Income Tax Act 1961, the total preliminary expenses cannot be more than 5 % of the capital employed, which can be amortised in five equal installments, this also means that a company cannot write off ...
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Rucha rajesh shingvekar
![best-answer]()
https://www.setindiabiz.com/learning/company-preliminary-expenses-treatment/
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Rucha rajesh shingvekar
In Profit and Loss Account :- Preliminary Expenditure written off during the year should be shown in notes Under 'Other Expenses'. In Revised Balance Sheet :- In Revised Balance Sheet it should be shown as 'Other Assets' and its amount should be shown in non current Assets column.
I mean why provision of two act . contradictory i.e. company law silent about upto 5 percent of CE/Pro.Cost .... meanwhile AS 26 said write-off in once go before it became asset ..... I confuse
Normally preliminary expense are treated as intangible asset and shown on the asset side of the balance sheet under the head Miscellaneous asset. The preliminary expenses are amortized or written off in five years for the purpose of Income Tax in India.
preliminary expenses can be written off within five years however as per Section 35 of The Income Tax Act 1961, the total preliminary expenses cannot be more than 5 % of the capital employed, which can be amortised in five equal installments, this also means that a company cannot write off preliminary expense more than 1 % of the capital employed in one year. At the time of computation of the taxable income the assese must add the preliminary expense written off in the balance sheet which is prepared by following the provisions of The Companies Act 2013 and deduct the preliminary expenses as 1/5th of the 5% of the capital employed.