What are the Preliminary Expenses of a company class 12
Looking for what are preliminary expenses of a company as per the syllabus of class 12 CBSE, ISC, and state Board.
This topic is concerned with the accounting for the share capital chapter of class 12 accountancy.
Meaning of Preliminary Expenses of a company (class 12)
- Expenses incurred on the formation of a company are termed as ‘Preliminary Expenses’. These include the following:
- Expenses incurred on the preparation and printing of various documents needed fro the registration of a company.
- Stamp Duty and registration fees on these documents
- Duty payable on Authorised Capital
- Cost of preliminary books
- In case the Company has been formed to purchase a running business, the fees charged by Accountant or Valuer valuing the assets and liabilities of that business.
Note:- As per AS – 26 Preliminary Expenses are to be written off in the year in which they are incurred. They should be written off first from Securities Premium Reserve Account and in its absence from the Statement of Profit & Loss in the same year.
