Whether first insurance can be capitalised?

[Eshanya]

A new car is purchased.first insurance is done by dealer itself.
Should it be capitalized?

[Vignesha M]

I too have doubt about this one.

[vishnu kiran]

No, insurance is a recurring expense. but you can say that to put asset into workable condition(on road) you have to have insurance!!!!!! now???!!!

but road tax has to be capitalised!! I

 

[Vignesha M]

When you sell the asset, buyer will not pay you for road tax separately.. Can we treat it as revenue item.??

[Eshanya]

If we inform the dealer beforehand that the first insurance will be
done by us privately, we can get it done from outside agents. The
question is whether they will release the vehicle without insurance
being done in case we opt for the option i just mentioned?If yes, then
i think it is revenue item. if no,then capital.

Road tax has to be capitalized because it is illegal to ply on road
without paying taxes.

The buyer may not pay tax separately. But the amount of tax paid can
be determined by going through the tax paid challan given.Cannot be
treated as revenue item.

On Sep 10, 10:16 pm, Vignesha M <mvigne...@gmail.com> wrote:
> When you sell the asset, buyer will not pay you for road tax separately..
> Can we treat it as revenue item.??
>

> On Fri, Sep 10, 2010 at 9:23 PM, vishnu kiran <vishnukira...@gmail.com>wrote:
>
>
>
> > No, insurance is a recurring expense. but you can say that to put asset
> > into workable condition(on road) you have to have insurance!!!!!! now???!!!
> > but road tax has to be capitalised!! I
>

> > On 9/10/10, Vignesha M <mvigne...@gmail.com> wrote:
>
> >> I too have doubt about this one.
>

> >> On Fri, Sep 10, 2010 at 2:44 PM, Eshanya <esha...@gmail.com> wrote:
>
> >>> A new car is purchased.first insurance is done by dealer itself.

> >>> Should it be capitalized?- Hide quoted text -
>
> - Show quoted text -

[Santhosh Prabhu]

First insurance paid is to be capitalised. Detailed reasons will be given
to you later.