Purchase of car against additional warranty charges

it should be capitalised as per my view

it should be capitalize

capitalized to asset

Hi

As per my op you should not capitalise this extra amount and post should be in Insurance or repairs and maint cost,

addition warranty charges....can be aptly be described as expenditure expended for maintaining the asset,rather than increasing earning capacity...so it should be routed through p/l...under head repair and maintainance cost.

I guess since the additional warranty charges are levied to effect a contract of sale, which is necessary and expedient for the purpose of the business, the same should be considered as cost component. Therefore, the same should be capitalized.

At  the time of purchasing an asset , whatever you incur the expenditure it should be capitalized to the asset.

Definetly it should be capitalized couse it is done at the time of purchase & before the assets is put to use..........

this will be capitalised

I think it is a deferred revenue expenditure and it should be written off  over the period of warranty. Even though they are paid at the time of buying the asset, there is no obliagation on the buyer to make payment for warranty charges. So there is no need of capitalising it.

Agreed with Mayur...it should be charged to P/L..

Additional warranty charges paid at the time of purchase is for the future maintenance of the the asset. So, it is an expense and should be debited to P/L A/c. It cannot be capitalised......

While normal warrnty provided when asset procured do not normally carry any specific price and hence it is indirectly capitalised as part of asset price.

Addtional warrnty is not meant for asset aqusition but an insurance for breakdown during usage, hence it has to be charged off either as expnese or if it is material treat it as deffered revenue expenditure.