Car insurance expenses
This query is : Resolved
04 August 2015
An assessed has paid amount to insurance company for car insurance in respect of new car purchase.
1.whether the amount is capital or revenue expenditure?
2. if the amount is capital expenditure,then how will be made the entry in the books of accounts of the assessee
04 August 2015
First insurance is mandatory for getting RTA approvals etc without which you cannot use legally. hence any cost to bring the asset to working condition need to capitalised.
Hence first insurance is capital expenditure.
Any renewal of same to be treated as revenue expenditure.
Entry will be
Car A/c
To Bank
(with car Ex price +Lift time tax + first insurance + other incidential expenses)
Hence first insurance is capital expenditure.
Any renewal of same to be treated as revenue expenditure.
Entry will be
Car A/c
To Bank
(with car Ex price +Lift time tax + first insurance + other incidential expenses)
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