Accounting standard on insurance premium paid

JAYANTA KUMAR BANDYOPADHYAY (professional service) (293 Points)

19 November 2013  
We have purchased Rail Locomotive worth Rs.1.50 Cr for factory's uses. We have also taken insurance coverage to be renewed every year. Accounts Dept mentions that the first insurance premium is to be capitalised. But is it logical when it is only annual policy. What AS / Guideline States.