The Preliminary Expenses in Balance Sheet

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The Preliminary Expenses in Balance Sheet
LOKESH KUMAR SEN, Accountant, India, Member

Where are the preliminary expenses situated in the balance sheet? (...) Read more? Sign up for free

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Preliminary Expenses in Accounting
Jaap de Jonge, Editor, Netherlands

Preliminary expenses are those that are incurred before incorporation of a company (i.e., commencement of a business firm).
For example:
- Legal fees (like statuary fees),
- Logo and brand design costs,
- The cost of printing and circulating the memorandum, articles of association, and prospectus,
- Expenses for raising initial share capital,
- The cost of printing of share certificates
These expenses are incurred before the start of the company. Their benefits accrue for many years. They are therefore classified as capital expenditure and shown on the balance sheet under Current Assets (subcategory: other other current Assets). They may be written off over a period of (5. Years or amortized within the same year (depending on their size and on local laws).

Preliminary Expenses of Founders
Hira Aziz, Pakistan, Premium Member


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