27 December 2013
As any expense incurred on assets to bring it in usable condition must be capitalise. A car can not be used without being insured as per the Motor Vehicle Act, Hence Insurance of a car is necessary to bring it in usable condition. Therefore, it must be capitalized and added to the cost of the car.
As far as subsequent insurance is considered , then this is to maintain the car in working condition. Son st Ins. must be capitalized and further any insurance should be debited to P/L account..
CAclubindia
