Pinnacle Manufacturing Company Case Study

How should a company account for the legal costs of formation? Should the accounting treatment be the same as that for underwritten and other share issue costs?

Generally it is recorded as the asset but as it does not have any economic future benefits to the company and it occurs only once so it should be treated as intangible assets. Under paragraph 69 of AASB 138, intangible assets does not allow the initial cost to be treated as an asset which needs to be treated as an expense and should be written off immediately as an expense.
Underwriting and other issue costs are treated as a contra to the share capital account and hence are deducted from share capital in determining the amount of equity raised from the share issue. If share issue