Activa Insurance Expenses

Sandeep Jain (Pivate) (1184 Points)

20 February 2024

Dear Sir,

we have purchased active Two wheeler Rs.77000 and Rs 15000 as insurance charges. We book active as fixed assets Rs. 77000/- now please suggest in books of accounts can we book Rs. 15000/- insurance charges as indirect expenses or adjust with proprietor,s Capital account

Thank you

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13 Replies

RAJA P M ("Do the Right Thing...!!!") (125418 Points)
Replied 20 February 2024

No...
The Insurance Charges also account in Activa account.
Means account the insurance charges in the Asset account (Activa Account).

prasad Nilugal ( GST Practitioner & Accounts ) (13996 Points)
Replied 20 February 2024

Yes , agree with Raja PM sir , as per AS10 initial cost incurred for asset should be Capitalise, means added back in cost of an asset.

1 Like

sabyasachi mukherjee (24888 Points)
Replied 21 February 2024

Two wheeler to be used by whom??

prasad Nilugal ( GST Practitioner & Accounts ) (13996 Points)
Replied 21 February 2024

Activa should be for business purposes, and I think it is for business purposes , to show an asset in the books of accounts.

Jacky (Accountant & CA Final Student) (320 Points)
Replied 21 February 2024

What is the policy period ?
normally for new vehicle, it is for 5 years .i.e when future economic benefits are there (more than 1 year) then capitalize i.e add in fixed assets

1 Like

RAJA P M ("Do the Right Thing...!!!") (125418 Points)
Replied 21 February 2024

Well question...

In the current scenario the policy terms to be 5 years.
The value also account in the Asset head (Activa). It's can't be split up for 5 years.

(The 5 years insurance like 5 years for thrid party and one year for rider)

1 Like

Sandeep Jain (Pivate) (1184 Points)
Replied 21 February 2024

Respected Raja Sir,

So total value Of Activa Fixed assets Rs. 92000/- and we have claimed Deperication On Rs.92000 @ 15% Rs.13800/-

RAJA P M ("Do the Right Thing...!!!") (125418 Points)
Replied 21 February 2024

Originally posted by : Sandeep Jain
	Respected Raja Sir,So total value Of Activa Fixed assets Rs. 92000/- and we have claimed Deperication On Rs.92000 @ 15% Rs.13800/-

Yes, You can claim depreciation as above.

But, date of purchase of vehicle??

Sandeep Jain (Pivate) (1184 Points)
Replied 21 February 2024

Sir,

29 August 2023

RAJA P M ("Do the Right Thing...!!!") (125418 Points)
Replied 21 February 2024

Originally posted by : Sandeep Jain
	Sir,29 August 2023

Okaay, You can depreciate as per Your above said value....

Sandeep Jain (Pivate) (1184 Points)
Replied 21 February 2024

Thank you Sir,

1 Like

RAJA P M ("Do the Right Thing...!!!") (125418 Points)
Replied 21 February 2024

You are welcome...

Knight Brett (6 Points)
Replied 23 February 2024

You can book the Rs. 15,000 insurance charges as indirect expenses. This approach reflects the cost incurred for ensuring the asset (the two-wheeler) and is typically treated as an expense in the profit and loss statement.