A Motor cycle costing
1) Rs.52,804 was purchased.Additional fitings cost -Rs.3000 (Capitalised both)
2) Road Tax Rs.3500,Number registeration-Rs.1200,Vehicle insurance Rs.3000.
Is it necessary to capitalise items listed as Sl no.2
Menu
Accounting of motor cycle purchase
Replies (5)
Yes all should be capitalised as per Accounting standard 10
In my opinion vehicle insurance cannot be caputalised. It is recurring in nature
As per AS 10, Accounting for Fixed Assets,
An Asset should be recorded in the books at histroical cost
Historical Cost includes, Purchase Price + Non Refundable Taxes + All costs those are directly attributable to bring asset in its present location or condition or its intended use.
Hence all Costs those are directly attributable for bringing the asset for its present location should be capitalised.
The insurance cost if not incurred then also the asset brought to its present location with out any difficulty then the insurance cost should not be capitalised, But if the insurance cost is necessary to bring the asset in its present location then it should be capitalised.
Yes , Sl.no 2 also captalised , since expenses related to new asset ,it should capitalised
Jyotis,
I agree with all the experts that cost which helps to bring the asset to the Present location should be capitalised but Insurance cannot be capitalised as without insurance too you can bring the asset to the Present location.
Hence it should be treated as revenue Expense as suggestted by Ajit Hegde!!
Hope it clearifies your doubt.
Regards.
Recent Topic
- ITR-2 : cash income that does not fall under any h
- Debit note issued to supplier
- Ca pratik takkar imp list
- TDS EXECESS AMOUNT ADJUSTMENT
- What's the ONE thing about GSTR-2B / IMS reconcili
- Is GST Registration Mandatory for Freelancers in I
- ITR TO FILE
- Shift of Place of Business from one state to anoth
- Form 10E u/s. 89(1). Need clarification because Ex
- Long Term Capital Loss - Tata Capital unlisted sha
Related Topics
CAclubindia
