Durga prasad (Student CA CPT ) (116 Points)
12 June 2013please explain it with your views......
Accontancy
1)Mr. A purchased a car on 1.6.10 for Rs.5,60,000 and incurred Rs.25,000 for registration. He paid Rs.10,000 for insurance and Rs.1,500 for petrol. What amount should be debited to Car A/c.
a) 5,60,000 b) 5,96,000 c) 5,95,000 d) 5,85,000
2)A Bill is drawn for 3 months on May 12th. The
CA Suraj Lakhotia
(IndigoLearn)
(4898 Points)
Replied 12 June 2013
Here are the hints -
1. Insurance charges is for one year and recurring in nature.
2. 3 days grace is available for bills. 15th is public holiday.
You may try to solve these now.
PMA Nooruddin
(M.Com, Finance Manager)
(422 Points)
Replied 12 June 2013
Revised Answers 1-D 2-C
if the bill due date falls on public holidays etc by suo moto the date will move to next working day...
SAURABH PANVELKAR
(ARICLE ASSISTANT)
(250 Points)
Replied 12 June 2013
1. - C
as only capital nature i.e. one time expenses debited to asset account.
2. - B
Due date is 15 aug which is pre announced govt. holiday and not a sudden holiday. so one day before due date is maturity date.
suraj singh chauhan
(Accountant)
(124 Points)
Replied 12 June 2013
1.d and 2 b
as insurance charges are of revenue nature and not of capital nature
and 15th aug is public holiday so 1 day before i.e. 14th will be due date of bill including grace days.
CA. Ritu Agarwal
(CEO)
(52 Points)
Replied 12 June 2013
1) D ( Insurance on car is done for one year hence should be treated as revenue expenditure as recurring in nature and petrol is also regular expense should not be capitalised)
2) B (Due date is 15 aug which is pre announced govt. holiday and not a sudden holiday. so one day before due date is maturity date.)
PRANAV MISHRA
(CA Final student)
(573 Points)
Replied 12 June 2013
Amount to be debited to car a/c shall be Rs 560000 + Rs 25000 = Rs 585000
Bill's due date shall be 14th Augest because 15th Augest is a public holiday.
REGARDS.
Durga prasad
(Student CA CPT )
(116 Points)
Replied 12 June 2013
in the case of public holiday maturity date falls on previous day..
but don't you think that due date is 12 aug ?????????????
CA Suraj Lakhotia
(IndigoLearn)
(4898 Points)
Replied 12 June 2013
Due date is 12th August + 3 grace days.
15th August.
Since 15th August is a holiday, 14th would be the due date.
suraj singh chauhan
(Accountant)
(124 Points)
Replied 12 June 2013
don't you think you forgot to add the bill grace day
12th aug+ 3 days= 15th Aug(Public Holiday) = 14th Aug
DS Sajwan
(MBA)
(58 Points)
Replied 12 June 2013
Dhruvi N suthar
(Account Executive)
(303 Points)
Replied 12 June 2013
IF any expense incurred before the asset is put to use then it is capitalised & here Insurance Paymentmade before the asset is put to use
dont feel so it is capitalised if the Payment of Insurance is for more than 1 year.??????
Dhruvi N suthar
(Account Executive)
(303 Points)
Replied 12 June 2013
It means its capital in nature at the time of purchase of new assets.
All the Expenses incurred before the assets is put to use are capitalised & depreciation will be provided on the same & if you are in Insurance business than it will be treated as revenue expense.
CAclubindia
