take it to prepaid expenses and charge it off over the period of warranty...thats the way all MNCs do
Purchase of car against additional warranty charges
Page no : 2
CMA Sameer Epari
(CA Final Student)
(409 Points)
Replied 25 May 2011
It should be capitalised as part of the cost of the car...
CA Paras Munot
(Partner at M/S S P A Y & CO)
(21 Points)
Replied 25 May 2011
It Should not be capitalise just because it is paid at the time of purchase of capital asset.It is an defered revenue expenditure to be amortised over warrantee period.
Rajesh Kurmi
(Finance Executive & IPCC )
(87 Points)
Replied 25 May 2011
It should be treated as Capital Expenditure iand if the same had been done before the incorporation of the company then simultaneously we can treat this as Preliminary Exp and write it off as every year.
Balram Begari
(Accountant)
(122 Points)
Replied 25 May 2011
Dear Manik,
I think it should be capitalize as it is warannaty charges and charging at the time of purchase.So better it will capitalize at along with machine.
best regards,
Balram
ABHISHEK CHATURVEDI
(A CA in PROCESS..)
(101 Points)
Replied 25 May 2011
Yes,it should be capitaliaed because it was incurred at time of purchase of a asset.
mukesh choudhary
(CA FINAL)
(32 Points)
Replied 25 May 2011
OF COURSE IT SHOULD BE CAPITALIZED BECAUSE IT IS THE COST UPTO THE POINT OF PROCURING THE ASSET
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 25 May 2011
AT THE TIME OF PURCHASE IT SHOULD BE CAPITALIZED
ADITYA
(Manager Finance)
(742 Points)
Replied 25 May 2011
The Warranty charges are over and above i.e. additional from the cost of vehicle, and is shown seperately in the Purchase Invoice.
While purchasing the vehicle we also buy Insurance Policy and the same is not being Capitalised.
Like wise, Additional Warranty Charges is expenses and be booked like pre-paid expenses and to be booked for the additional year/s for which warranty is extended.
nagaraj
(student)
(206 Points)
Replied 25 May 2011
if the warrantee expenses are optional then the same will be incurred for the maintenance of the asset, in this case it should be charged to revenue, other wise vice versa.
Recent Topics
- Clarity regarding Sec 16(4)
- GST ON HOTEL ROOMS details
- Relief for Delayed Filing of Tax Forms
- Expire stock
- INCOME TAX AY 25-26
- Experienced CA firm for accounting & auditing
- Regarding Perquisite Tax on ESOP - Unlisted Compan
- Casual Taxable Person under GST
- Extended Date of GSTR-1 for the month of July 2020
- NRO Interest - Taxed at source and in Foreign Coun
Related Threads
CAclubindia
