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what is the meaning of preliminary expenses and how you
shown in balance sheet

Answer Posted / anjali

preliminary expenses are incurred in the formation of a company or before incorporation . some examples are fees to ROC, licence fees , legal charges and other incorporation related charges incurred by the promoters. preliminary expenses are shown on the assets side of the balance sheet and amortised over the first 5 years as per the INCOME TAX ACT,1961.The amortised amount is written off in the P/l a/c on the debit side.

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