Recording expenditures for a start-up company

Many investors incur expenditure before the company is incorporated. How to account for such costs frequently raises questions as to the appropriate treatment. We take a closer look.

Keywords: Mazars, Thailand, Accounting, TFRS, NPAEs

24 April 2018


Investors agreed to set up Company A in Thailand in January 2018. During the process of setting up the company, preliminary expenses, such as governmental fees, legal expenses, and professional fees, were incurred.


Should Company A record such expenditures as expenses or as intangible assets in the financial statements in 2018?


Paragraphs 159 and 159.1 of the TFRS for NPAEs state that expenditures incurred to provide future economic benefits to an entity, where no intangible asset or other asset is acquired or created, can be recognized as expenses. Examples of such expenditures include the following:

1. Expenditures for start-up activities, such as legal and secretarial costs incurred upon establishing a legal entity, expenditures to open a new facility or business, or expenditures for starting new operations or launching new products or processes.

2. Expenditures for training activities.

3. Expenditures for advertising and promotional activities.

4. Expenditures for relocating or reorganizing all or part of an entity.

Therefore, Company A must recognize expenditures related to a start-up company as expenses in its financial statements.

References: and TFRS for NPAEs