What are Unamortized Expenses?

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Solution

Expenses that are not written off to the company’s Statement of Profit/Loss on a regular basis are known as unamortized expenses. Because the gain from incurring such expenditure is not realised in a single year, they are not fully charged in the year in which they are incurred. The historical cost of an item is the amount paid for it by the owner less total depreciation, which is the amount deducted each year for accounting reasons up to that time.

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Q. Difference between amortized and unamortized expenses

Non-cash expenses like depreciation, depletion & amortization expense are _______ to net profit before tax under indirect method.

Out of the following, identify the items to be shown in the Notes to Accounts on 'Other Expenses' :

(i) Rent for factory

(ii) Internet Expenses

(iii) Carriage Inwards

(iv) Salaries

(v) Leave Encashment Exp

(vi) Commission Allowed;

(vii) Bad Debts written off

(viii) Audit fee

(ix) Depreciation on Computers

(x) Computer Software amortized

Under which major head of the Statement of Profit and Loss of a Company following items will appear :

(i) Bonus

(ii) Revenue from Services rendered

(iii) Internet Expenses

(iv) Materials Purchased

(v) Discount on Issue of Debuntures written off

(vi) Goodwill Amortized.

Prepare a Comparative Statement of Profit & Loss from the following :

$\begin{matrix} 31 - 03 - 2014 & 31 - 03 - 2013 (Rs) & (Rs) Revenue from Operations & 80, 00, 000 & 60, 00, 000 Depreciation and amortization expenses & 3, 00, 000 & 2, 00, 000 Finance Costs (60 % of Revenue from Operations) Other Expenses & 40, 000 & 40, 000 Employee Benefit Expenses & 7, 20, 000 & 6, 00, 000 Other Income & 8, 000 & 10, 000 \end{matrix}$

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