shreyans jain
(ABC)
(192 Points)
Replied 13 June 2013
Hi,
While calculating FMP some books have taken the profit for the year since the data is given, while in some books the y have ignored the first years profit stating that we cant compare those profits from the earlier years and average has been taken accordingly. Can anyone let me know which one is correct??
TIA
Read more at: /forum/g-w-valuation-query-252524.asp
Fall Out Boy
(Article Trainee)
(83 Points)
Replied 13 June 2013
OMG! So many people are answering wrong.
The first problem clearly states, from how much amount you gonna debit the Fixed Asset a/c . Obviously with the amount which is required to be paid for getting the Asset in usable condition, i.e., 5,60,000 + 25,000 = 5,85,000. Now, insurance is clearly a revenue expense you are not going to depreciate insurance charges, I really hope so.
In the second problem its 14th August.
Those who are unable to answer, kindly go and take CPT once again.
CA Suraj Lakhotia
(IndigoLearn)
(4898 Points)
Replied 14 June 2013
| Originally posted by : Dhruvi N suthar | ||
 |
Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession. 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. |
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Reply to the highlighted text -
There is no rule that all expenses before assets are put to use are capitalised. It depends on the nature of expenses being incurred.
Kanika Jain
(Fresher)
(180 Points)
Replied 17 June 2013
It can be 585000 or 595000 as there is no hard and fast rule for capitalisation of first Insurance charges paid. Its depend on the discretion of the company.
The due date for bill is 16 th august
CA Suraj Lakhotia
(IndigoLearn)
(4898 Points)
Replied 17 June 2013
Kanika, Due date of bill is 14th August.
Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 28 June 2013
1.The cost of Car should be Rs.585000/- as insurance and petrol are revenue expenses.
2. In case of Bills three days of grace are added to get the 'Due Date'. But if due date falls on a public holiday, then it is shifted one day before. In this case it should be 14th August.
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