The profile earned by the company after its registration and prior to it's registration. The company has to divide the income and its expenses according to the available sales ratio, time ratio or can also be specific.
What Do You Mean By Profit Prior To Incorporation?
When a running business is taken over by the promoters & the new company is formed then the profit which is earned by the firm before getting certificate of incorporation is called profit prior to incorporation. This profit is transfer the capital reserve account this is a restricted reserves. Is any loss occure than that is transfer to goodwill account.
I think profit prior to incorporation means which profit the date of purchase to date of incorporation.
Profit or loss sustain by company, after the date of purchasing a ongoing business and before the date of certificate of incorporation. If there is a profit it is treated as capital profit or Loss as goodwill.
The profit earned by the company after its incorporation and prior to it's registration under the registrar . It is treated as capital profit .
