Dear sir
A person purchase Car for business purpose. person have proprietorship business. At the time of Purchase of car, Car company doing insurance and RC ( registration certificate) now question is whether claim this insurance and RC amount as Expenses in PNL or Capitalized
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Insurance expenses car purchase
Replies (5)
The first insurance premium and RC expenses have to be capitalized. But the subsequent annual insurance premiums have to be expensed off.
These have to be capitalized as part of cost of the car.
Doing both methods, either capitalise the cost only or can capitalise the entire amount incurred.
since insurance and registration charges are revenue expenses in nature. so it cannot be capitalised. Debit in P & L account.
This registration fee can bbe treated as a cost necessary for the asset to work as intended by the management. So include it in the cost of vehicle. Similarly, Insurance has to be capitalised, the deposit part, and expense any premiums on it. If it is only fee/premiums type, expense it monthly/annually as it is tax allowable. This is better tax planning,
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