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Capital expenditure

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27 December 2013 insurance paid at the time of purchase of car. wheather insurance paid to be capitalised or not???
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CA Pallav Singhania

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CA Pallav Singhania (Expert)
27 December 2013 As any expense incurred on assets to bring it in usable condition must be capitalise. A car can not be used without being insured as per the Motor Vehicle Act, Hence Insurance of a car is necessary to bring it in usable condition. Therefore, it must be capitalized and added to the cost of the car.

As far as subsequent insurance is considered , then this is to maintain the car in working condition. Son st Ins. must be capitalized and further any insurance should be debited to P/L account..
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