FIRST INSURANCE OF CAR

Dear Rahul,

if it is coming with the car vendor invoice, you can capitalise it or you can taken it as revenue. Generally car vendor has tie up with the insurance company for having such type of insurance and it is being added to the cost of car as without insurance payment car can not be taken to home.

Regards,

Hi Rahul,

With due respect to Bhavik dada,

First insurance shall be capitalised. Further, there is no option as such, whether it is coming with vendor invoice or not since as per Motor Vehicles Act - Insurance is mandatory before you can use the vehicle.

Para 20 of AS-10 reads as under -

The cost of a fixed asset should comprise its purchase price and any attributable cost of bringing the asset to its working condition for its intended use.

yes it should be capitalised as per as 10.

insurance is mandatory for all the year not only for the first year. so in my view it should be charged to p & l a/c.