If a company purchases a new vehicle say a car for total cost of Rs 400000 which includes Rs 15000 as 1st yr dep also, then shd the co. capitalize full 400000 in books or it shd capitalize only 390000 and expense off the insurance amt of Rs 10000?
12 May 2009
I am reqwording your query as following
If a company purchases a new vehicle say a car for total cost of Rs 400000 which includes Rs 15000 as 1st yr Insurance also, then shd the co. capitalize full 400000 in books or it shd capitalize only 385000 and expense off the insurance amt of Rs 15000?
The reply is capitalise entire 4Lac as the first year insurance is an expenditure is to being the motor vehical in working condition.
12 May 2009
Normally Initial year Insurance of any vehicles which is necessary for running on thr road, hence insurance needs to capitalised along with the Vehicles
CAclubindia
