Insurance premium- on fixed asset
This query is : Resolved
21 June 2014
Insurance premium paid on insurance of fixed asset is capital expenditure OR revenue expenditure.????
Sandeep Dharar
(Expert)
21 June 2014
For First year insurance capitalize it. For following years book it as revenue expenditure(P&L A/c)
CA Yugal Purohit
(Expert)
21 June 2014
Capital expenditure is the expenditure which improve the life of assets and increase the efficiency of the assets, therefore insurance premium paid on fixed assets is neither improve the life of assets nor improve the efficiency therefore it is revenue expenditure.
CA Yugal Purohit
(Expert)
21 June 2014
Capital expenditure is the expenditure which improve the life of assets and increase the efficiency of the assets, therefore insurance premium paid on fixed assets is neither improve the life of assets nor improve the efficiency therefore it is revenue expenditure.
Sandeep Dharar
(Expert)
21 June 2014
But Jugal we have to capitalize the insurance premium for first year.
21 June 2014
First Year Capitalized or Not?
Sandeep Dharar
(Expert)
21 June 2014
It will b capitalized for ist year and treated as revenue for the following years. This is the practical method.
Rupesh Jain
(Expert)
21 June 2014
it is revenue expenditure and charge to profit & loss a/c
it not increase the assets life or useful life or not related to mfg of assets
it not increase the assets life or useful life or not related to mfg of assets
Sandeep Dharar
(Expert)
21 June 2014
Rupesh plz update urself.
mehulmukati
(Expert)
22 June 2014
For all years it is a revenue expenditure as it does not increase / maintain life of asset
only insurance allowed to be capitalised is for transit
only insurance allowed to be capitalised is for transit
CA Yugal Purohit
(Expert)
24 June 2014
mehulmukhti is right, only transit insurance is capitalized and rest are revenue.
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