Capital expenditure
This query is : Resolved
27 December 2013
insurance paid at the time of purchase of car.
wheather insurance paid to be capitalised or not???
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..
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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