Insurance on purchase of new car

no

should be charged from p/l a/c

It should be charged to revenue up to 31st March and for the period beyond march should be amortised and debited to prepaid expenses.

 Whether without Insurance the car will be ready for use. In my opinion first insurance like Road Tax /Registration Charges should be capitalised.

It should be debited to p&l on accrual basis.

Vipul sir, I Think you are wrong.

As any expense incurred on assets to bring it in usable condition must be capitalise.

A car can not be used without being insured as per the Motor Vehicle Act, Hence Insurance of a car is necessary to bring it in usable condition. Therefore, it must be capitalised and added to the cost of the car.

Asfar as subsequent insurance is consudered , then this is to maintain the car in working condition.

Son st Ins. must be capitalised and further any insurance should be debited to P/L account.

Mr. Deepak

First Insurance to be capitalise, subsequent shoulc be debited to P & L as revenue expenditure. As per Govt. rules first delivery cannot be taken on the road without insuranceand registration . It is just alike  an installtion charges of plant. Whatever in manner all the first installation ch. and accessories of plant should be capitalise. Subsequent charges are replacement cost and to be debitet to P&L

Surana,Chennai

9952967237

First Insurance paid on purchase of Motor Car will be capitalised as without insurance the asset can not be ready to use and as per AS-10 such expenses should be capitalsed.......

hi

if the insurance is of one time nature then it should be capitalised and if the same is of recurring nature it should be expensed out

(insurance of one time nature - can be seen in the case of the trucks)

it should be capitalised as the vehicle can be bought to use only by payment of such insurance.

i agree with MM suran Sir.

I  agree with MM surana Sir. and nikita mam.

Yes first insurance should be capitalised as all said

and Mr Abhishek there are no one time insurance for trucks all insurance are done Max of onle year period only.

Mr. Arunkumar and Mr. Vipul

For more understanding pl. go through the meaning of "Actual cost " For this pl. refer sce. 43(1) of I.T.Act, 1961 and. read the TAXMANN'S  direct taxes law & practice book. U will be clear.

Surana,Chennai

9952967237.

In Accounting Practice, there were two types of transactions - one is Cash and the other is Non-cash.  All Cash transactions are recorded through Cash Book and Bank Book. Here cash transactions include bank transactions also.  All non cash transactions recorded through Journal.