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CAPITALISATION

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(Querist)
19 May 2010 SHOULD INSURANCE COST BE CAPITALISED WITH THE COST OF VEHICLE.

IF YES, THEN WHY NOT SECOND INSURANCE COST IS CAPITALISED.
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Akbar Mirza

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Akbar Mirza (Expert)
20 May 2010 When new vehicle is purchased, cost relating to acquisition of such assets such as insurance, registation fees, transportation charges etc. shall be capitlised as per AS 10.

Hence, here the insurance of vehicle shall be capitalised with the cost of vehicle.

Next year it will not be a part of cost of vehicle, insurance exps shall be of revenue in nature in next year, hence it shall not be capitalised.
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