The Preliminary Expenses in Balance Sheet

Finance and Investing

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LOKESH KUMAR SEN
Accountant, India

The Preliminary Expenses in Balance Sheet

Where are the preliminary expenses situated in the balance sheet?

  Jaap de Jonge
Editor, Netherlands
 

Preliminary Expenses in Accounting

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).

  Hira Aziz
Entrepreneur, Pakistan
 

Preliminary Expenses of Founders

Preliminary expenses also includes the remenuration of the team that has incorporated the company and took steps for its...

 

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