Insurance on new car
This query is : Resolved
12 October 2012
does insurance on new car be capitalised or charged as revenue expense..???
Dintakurthi Tirumala
(Expert)
12 October 2012
In one view it is capital expenditure and in an another view it is revenue expenditure. But however all expenditures made for the purpose of purchase or installation of capital asset would be capital expenditure. Based on these principle we are following insurance charges incurred for the first time at the time of purchase of car is capitalised and further renewals of insurance policy will be revenue expenditure.
OM SAI SRI SAI JAI JAI SAI
OM SAI SRI SAI JAI JAI SAI
Amol S Joglekar
(Expert)
12 October 2012
As is decided in various case laws, for the existing entities it may be treated as revenue expenses at the choice of entity
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