18 August 2007
what will be the treatment of insurance expenses paid for the first time on purchase of a new vehicle-whether it is to be capitalised or not?
19 August 2007
All expenses that are incurred in bringing the asset to the present location and usage requires to be capitalised. Since the vehicle is not to be on road unless the same is properly insured as per the MV Act, the insurance premium paid for the first time requires to be capitalised
19 August 2007
Only the third party liability part should be capitalized as this is the part of insurance expenses without which the vehicle cannot be made available for use. However, one should consider materiality aspect to this.
20 August 2007
As far as accounting is concerned, it must get capitalised. But in the point of view of Audit, materiality need to be seen. Other things as mentioned above.
17 April 2013
In a public limited oe listed companies the the amount of premium of insurance will always be immaterial amount. So if we treat the the first insurance premium as revenue expenditure, the basic provisions of AS 10 will always get violated by following materiality priciple. Hence whether material amount or not, the first premium of car insurance should always be capitalised
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