Treatment of pre opening Expenses

Hello guys,

I’m an internal auditor in a hotel chain that mainly manages hotels owned by different owners.

I wanted to get some clarification on the treatment of pre-opening expenses. Is there a general understanding that the pre-opening expenses of the hotel should go below the GOP so that Operator’s fee is not affected? But I can’t find an exact reference to this principle. I’ll appreciate if anyone can point me in the right direction.

Because pre-opening expenses must be posted as current expense items, Generally this term is given to expenses that would be deductible currently if they had been incurred after actual business operations had begun. then if it`s over GOP, it means more investment, in other words, the hotel will pay more tax.

The Accounting Standards Executive Committee sets the rules for "generally accepted accounting principles, “to standardize reporting on such activities.”

Thanks for the reply@ Rodrigo but since I’m from the GCC, we don’t have to worry about taxation issues. My question remains the same is the classification of pre-opening expenses below the GOP line is written in any standards of other procedures or not.

The pre-opening fees don`t have to be less than GOP, but auditors usually “make” it less than GOP by putting some start-up fees into an item of “Long-term deferred and prepaid expenses”, I guess many countries referred to accounting standards of USA, but no special standards or procedures requiring this, if there is, it would be improper and a little bit weird.