andy chuksPreliminary Expenses are expenses incurred in formation and setting up a business/company. They include expenses for preparation of feasibility report, project
report or for conducting market survey or any other survey or engineering services relating to the business and Legal charges for drafting any agreement for setting up or for conduct of any business, consultancy services, office equipments etc. Thus, they are expenses incurred before commencement of business.
Preliminary Expenses are treated in accounting by amortising it over some years (usually 5 years). In some cases they are written off in Profit and Loss Account in a deferred way. 1020 October 2010