If company purchased motor car for business purpose and also addition to fixed assets, now my doubt is while purchasing motor car company paid reigstration fees, insurance and others expenses, is it neccessary to capitalise the insurance paid in the first time when purchased by the company and also my query is insurance is expenses so it should debited to P & L A/c ?, kindly anyone help me, whether i am right or wrong?
Thanks in advance
Registration fees is one time expenditure and is necessary to legally drive the vehicle and hence can be added to the cost of vehicle. However expenses on account of insurance is of revenue in nature and even the first premium is also valid for first year only. So it would be appropriate to treat it as a revenue expenditure.
@ Suraj, i also thought that, in one my client purchsed BMW car and paid insurance , registration fees and some extra fittings, but they werecapitalised the insurance paid while purchsing the car, is ti neccessary to revise and debited to P & L a/c ?
Insurance expenses relating to F.Y. concerned should be debited to P&L & the balance will be debited to Prepaid Insurance acc*nt to be shown under Loans & advances. This balance should be transferred to Insurance in the subsequent year.
Dear sir,
I have some queary for addition of faxed assets
My closing balance as 31-03-2014 of Rs. 100000/- and we want to addition on fixed assets
so please sujest me how much % applicable in Depration this year
CAclubindia
