Car first insurance

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why first insurance of car is always capialised..???

 

any particular section or law...please tell 

Replies (1)

Purchase of Car insurance is compulsary without which car cannot be used... Expenses which are incurred to bring an asset to usable condition are to be capitalized. Insurance expenses are incidental to the purchase of the car and hence capitalized 1st time... On subsequent renewal it is treated as revenue expenses

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