Help with VAT on Disposal and Part Exchange

jow774
jow774 Registered Posts: 465 Dedicated contributor 🦉
in AAT Level 3 (Level 6 in Scotland)
Can someone please give me a helping hand on recording VAT on disposal proceeds. I am fine with record the cost, record the depreciation but recording the proceeds when they include VAT has melted my brain????

Thanks

Comments

  • Cullen
    Cullen Registered Posts: 592 Epic contributor 🐘
    Possible credit disposals with the net, credit vat and debit bank with the cash received?
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor 🦉
    So in the case of a part ex would I just debit the new asset with the gross? You made it sound so simple and now I feel foolish for asking, lol, lol.

    Thanks
    :thumbup1:
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor 🦉
    So lets say Old Vehicle cost £15,000, accum depn is £7,500. New vehicle cost £14,500 (inc VAT) and Part Ex value on old vehicle is £5,000 (inc VAT) assuming VAT is 15%. How do I deal with this in journal form???? Im still stuck on the accounting for the VAT on part exchange proceeds?
  • Esme
    Esme Registered Posts: 711 Epic contributor 🐘
    Dr Disposals 15,000 cr Disposals 12,500 (7,500 + 5,000)

    Dr Vehicle at cost 14,500 (5,000 + 9,500) cr Vehicle at cost 15,000

    Dr Accumulated depreciation 7,500

    Cr Bank 5,000


    What type of company is it? Most companies can't claim the VAT back on vehicles.
  • PAMDILL
    PAMDILL Registered Posts: 721 Epic contributor 🐘
    You can claim VAT back on commercial vehicles such as vans and lorries.
  • Esme
    Esme Registered Posts: 711 Epic contributor 🐘
    Well wouldn't you then just take the VAT off the cost and put it to the VAT account?
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor 🦉
    But that leaves you with a debit entry for the VAT doesnt it? I am soooo confused.
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor 🦉
    So in theory I would post the invoice for the new vehicle to the purchase ledger, and then raise a kind of sales invoice for the proceeds which would take care of the VAT. Then do the disposal and acquistion as normal on the net value?? Is this correct?
  • Esme
    Esme Registered Posts: 711 Epic contributor 🐘
    You would debit the net cost to the vehicle account and de the VAT to the VAT account.
  • any2002uk
    any2002uk Registered Posts: 88 Regular contributor ⭐
    Esme wrote: »
    Dr Disposals 15,000 cr Disposals 12,500 (7,500 + 5,000)

    Dr Vehicle at cost 14,500 (5,000 + 9,500) cr Vehicle at cost 15,000

    Dr Accumulated depreciation 7,500

    Cr Bank 5,000


    What type of company is it? Most companies can't claim the VAT back on vehicles.

    i am confuse where did 9500 come from because i put part exchange £5000+bank14500 in Debit of COst account. is my way wrong?

    thanks

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