Purchase of car against additional warranty charges

it shud be capitalised..!!!

capitalized

Additional warranty charges is nature of expenses for  repairs and maintenance of the machinery which we are paying in advance at time of purchasing the machinery.

So we should book it as pre-paid expenses

ACC. to me , it should be capitalised bcoz these expenses made at the time of purchase .

As according to me its an revenue expenditure as because its not increasing the capacity beyond the stipulated period.

So it cant be capitalise.

or else let the experts reply ...

whatever amount incurred before the asset put to use must be capitalized.

I AM AGREE WITH SIR  CA HARI JI

it shuld be capitalized

additional warrantee is purchased alongwith the car purchase , and its like other expenses viz, registration, RTO fees, insurance ( 1st time), so it should be capitalized in 1st time, as per bill of dealer

from next renewal it would go in P/L, under head under repair and maintance or vehicle maintanance.

Dear Manik,

I would like to remind you the AS10 on Accounting of Fixed Assets. It says "Bringing the assets into working condition" and Directly attributable cost". Cost of warranty does not match both the concept in my view.

Capitalising a payment just because it is paid at the time of purchase is not right according to me.

So, Booking the cost paid for warranty in prepaid expenses and transferring to the expenditure every year in an equal proportion (Amount paid / No of years of extended warranty) till the warranty period expires may be the correct treatment.

STILL SEEKING ADVISE ON MY COMMENT...

Additional warranty which is similar to insurance and increases it's value as a whole(somewhat) has to be written of to p&l a/c over the period of warranty.(AS-10)

it should be capitalised because this exp. incurred at a time of purchases