Insurance Premium for vehicle

[Anup Kumar Grover]

Whether, First Car Insurance Premium Paid, on purchase of  Car, whether this amount to current expenditure or it be added to cost of Car? 

[PAWAN KUMAR SHARMA]

First Insurance Premium Paid for purchase of a New car should be Capitalize reason being as per Motor Vehicles Act, every vehicle on  road should be properly insured that's why before taking delivery we have to get the Insurance otherwise you will not be able to get the delivery of the car, means it is direclty linked to get the vehilce on road, hence should be capitalize.

 

[r.rajkumar kumar]

yes .

AI Summary

First Car Insurance Premium: Capitalize as Part of Vehicle Cost, Not Current Expenditure, per Motor Vehicles Act. A discussion on whether the first car insurance premium paid upon purchasing a car should be considered a current expenditure or added to the car's cost. The consensus, supported by two replies, is that the premium should be capitalized. This is because the Motor Vehicles Act mandates insurance for vehicles on the road, making it a prerequisite for taking delivery of the car, thus directly linking it to the vehicle's acquisition cost.