According to the relevant provisions of the accounting standards, all expenses incurred by an enterprise during the preparatory period, including personnel expenses, registration, travel expenses, office expenses, training expenses, etc., other than asset-based expenses, should be included in the start-up costs and amortized after the end of the preparatory period.

When expenses are incurred during the preparatory period, the start-up expenses can be accounted for through the "long-term amortized expenses" account. When the preparatory period is over, according to the actual situation of the enterprise and the scale of start-up expenses, choose a reasonable amortization method.

During the preparatory period, when the expenses are incurred, the following accounting treatment will be done:

Borrow: Long-term Amortized Expenses - Start-up Expenses

Credit: Bank Deposits

After the end of the preparatory period, if the scale of the start-up expenses is relatively small, the enterprise may choose to amortize the expenses at once, and the following accounting treatment will be done:

Borrow: Management Expense - Start-up Expenses

Credit: Long-term amortized expenses - start-up costs

After the end of the preparatory period, if the amount of start-up expenses is huge, the use of a one-time amortization is not reasonable, the enterprise needs to choose to amortize the amortization period, the general amortization period of not less than 3 years. Amortization of each period, as of the end of the amortization period, long-term amortized expenses are fully amortized. Amortization, the account treatment is:

Borrow: administrative expenses - start-up costs (installments)

Loan: long-term amortized expenses - start-up costs (installments)

It should be noted that the accounting standards and the tax law for the start-up costs of the relevant provisions of the difference, according to the requirements of the tax law, the enterprise in the preparatory period of the start-up costs should be incurred from the month following the month of the commencement of production and operation in a period of not less than five years. According to the tax law, start-up expenses incurred by an enterprise during the preparatory period should be deducted in installments over a period of not less than five years from the month following the month in which production and operation commence. When filing enterprise income tax returns, enterprises need to pay attention to tax adjustments

Warm reminder: The above content is for reference only.

Answer time: 2021-05-06, the latest business changes, please refer to the official website of Ping An Bank announced subject.

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