Purchase of car against additional warranty charges

take it to prepaid expenses and charge it off over the period of warranty...thats the way all MNCs do

It should be capitalised as part of the cost of the car...

Originally posted by : A.Jayasri
	At  the time of purchasing an asset , whatever you incur the expenditure it should be capitalized to the asset.

it must be capitalised

It Should not be capitalise just because it is paid at the time of purchase of capital asset.It is an defered revenue expenditure to be amortised over warrantee period.

it should be capitalize

It should be treated as Capital Expenditure iand if the same had been done before the incorporation of the company then simultaneously we can treat this as Preliminary Exp and write it off as every year.

Dear Manik,

I think it should be capitalize as  it is warannaty charges and charging at the time of purchase.So better it will capitalize at along with machine.

best regards,

Balram

Yes,it should be capitaliaed because it was incurred at time of purchase of a asset.

OF COURSE IT SHOULD BE CAPITALIZED BECAUSE IT IS THE COST UPTO THE POINT OF PROCURING THE ASSET

AT THE TIME OF PURCHASE IT SHOULD BE CAPITALIZED

The Warranty charges are over and above i.e. additional from the cost of vehicle, and is shown seperately in the Purchase Invoice.

While purchasing the vehicle we also buy Insurance Policy and the same is not being Capitalised.

Like wise, Additional Warranty Charges is expenses and be booked like pre-paid expenses and to be booked for the additional year/s for which warranty is extended.

if the warrantee expenses are optional then the same will be incurred for the maintenance of the asset, in this case it should be charged to revenue, other wise vice versa.

it should be capitalised

agreeing with mr.suren