Is this entry ryt

i think that this entry needs to be modified.

The entry should be

FA dr

 To Seller

and than

Insurance d/r

to Bank.

FA d/r

to Insurance

(Last entry if at all this needs to be capitalized)

darsh*t is correct. Fixed asset is capitalised with Value of Fixed assets+ cost of insurance.

Darsh*t is right

Darsh*t is right.

Alternatively the entry can be passed as below.

Fixed Asset Account Dr. (Cost + Insurance)

To Supplier (Cost)

To Bank (Insurance)

And when you repay the creditor for capital asset,

Supplier A/c Dr.

To Cash / Bank

yes, darsh*th is rite...ratan ji's explanation makes it more is clear. exps made for new asset before being put to use, shud be added to the FA value.

insurance is an expenditure of revenue nature. in any case it shuold not be added to the cost of asset.

if terms with seller provide for payment of insurance premium to seller and seller shall get the asset insured than follwoing entry should be passed:-

Fixed asset                                 Dr.     (cost)

Insurance expenses                 Dr.     (insurance premium)

              To seller/ cash / bank                                                     (total amount)