CUET Preparation Today
How should preliminary expenses be treated in the year they are incurred? |
Written-off from securities premium entirely Amortized over several years Reported as a separate liability in the balance sheet Ignored and not recorded in the financial statements |
Written-off from securities premium entirely |
The correct answer is option 1- Written-off from securities premium entirely. Preliminary expenses are to be written-off completely in the year in which such expenses are incurred. They should be written-off first from securities premium and the balance if any, from statement of profit & loss. |
