Capitalization of registration charges of Vehicles

[indyacctnt]

I disagree that you should capitalize registration fees. According to Principles of Accounting


"The cost of property, plant, and equipment includes the purchase price of the asset and all expenditures necessary to prepare the asset for its intended use....

<b>Equipment, vehicles, and furniture.</b> The cost of equipment, vehicles, and furniture includes the purchase price, sales taxes, transportation fees, insurance paid to cover the item during shipment, assembly, installation, and all other costs associated with making the item ready for use. <font color="red">These costs do not include such things as motor vehicle licensing and insurance, however, even if they are paid when a vehicle purchase occurs. Expenses of this type are normal, recurring operational expenses that do not add lasting value to the vehicle.</font id="red">"

Read more http//www.cliffsnotes.com/study_guide/The-Cost-of-Property-Plant-Equipment.topicArticleId-21081,articleId-21075.html#ixzz0j4Icmvuv

[kamranACA]

Dear Indyacctnt

Registration costs of vehicles are not the recurring costs at all, so your conclusion appears to be based upon some deficient info.

Registration expenses do not include "insurance" cover costs that are obviously the vehcile running operational costs.

You buy a computer hardware as well as a licensed software. So many software are available in pirated or unlicensed versions but civilized society (and corporate sector) uses the licensed versions. All licensing costs of software are intangible assets and are capitalized as such. These do not mean to include ongoing "insurance" costs of computer hardware and informational assets or other operational recurring expenses.

Without registration, you cannot even bring your vehicle on the road "legally", you cannot use it, operate it or get any benefit from it. So, the cost that is necessary to bring an asset in a useable condition and stature, that is also a non-recurring one time cost, and the cost that ensures that economic benefits will flow-in, is to be capitalized.

I don't find any preplexed issue in its understanding that is pulling this debate so long.

Regards,



KAMRAN.

[Qureshi Muhammad Zeeshan]

well buddy u r right there is no such word like vehicle license fee mentioned in above para, but dear it is not possible for them to mention the name of each and every cost of items to be included in the cost of an asset.therefore, they just mentioned a few of them and remaining costs are covered in this sentence "and all other costs associated with making the item ready for use" of the above para u mentioned.
and dear its my point of view being a student that without the license fee of the vehicle it is not ready for use.

[Sh.Mohsin]

Final conclusion of the discussion is that license fee should be capitalized