What is Start-up costs (financial reporting)?
In short
Costs of start-up activities, such as opening a new facility, entering a new market or organizing a new entity, are expensed as incurred under generally accepted accounting principles.
Key takeaways
- Costs of acquiring property and equipment are still capitalized under their own rules.
- For tax, start-up and organizational costs can be partly deducted and the rest amortized over 180 months, creating a temporary difference.
- Pre-opening advertising is also expensed.
Where it's tested
FAR: Intangible Assets & Goodwill — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Costs of start-up activities, including organization costs incurred to form a corporation, are: