bank liabilities and selling of assets.
annefreeman
Registered Posts: 21 New contributor 🐸
Hi all, wondering if you'd mind helping me with a scenario please?
If I had
a) a bank loan and had been claiming the interest as eligible expenditure over the last 2 years AND
b) a motor vehicle (van) which had been depreciated for 2 years only, the van was then sold.........as of April 2009 the van had a WD value of £2,800 but was sold for £2,560. Supposing I then used the proceeds of the sale to pay off the remaining bank loan in full (£1928.25).
I'm a little confused as to how this would be demonstrated in somebody's accounts.
My self employed friend has given me 2 years of his audited accounts to look at for practice and then told me this is what he did during 2010, but will only let me look at his 2009/10 accounts once I've figured it all out. This is supposed to be good practice for me so I can make sure what I'm doing is actually what's already been done by his paid accountant.
This is what I think................
I think as the van was bought in April 2008 for £3,500 and had £700 depreciated in 08/09 year, this left the WD value as £2,800. As he sold it for £2,560 there was a loss of £240. I've tried looking at doing a 'dummy' T account, but am getting myself mixed up because when I do the T account and move the depreciation expense and WDV into the disposal account, that gives me £3,500 so to compare that with the other side of the disposal account of £2,560 it gives me a figure of £940 (loss) to go into the P&L account.
I know I'm going to be 50% wrong here
I'm completely at a loss as to paying the bank liability off.
I think, assuming there are no loan interest payments claimed during 2009/10, that I either:
1) only allow as expenditure the paying off of the interest on the whole loan or
2) allow the whole balancing loan payment £1928.25 as eligble expenditure for that year.
You can probably tell from the above I'm going round in circles a bit and would really appreciate some advice.
Many thanks in advance.
If I had
a) a bank loan and had been claiming the interest as eligible expenditure over the last 2 years AND
b) a motor vehicle (van) which had been depreciated for 2 years only, the van was then sold.........as of April 2009 the van had a WD value of £2,800 but was sold for £2,560. Supposing I then used the proceeds of the sale to pay off the remaining bank loan in full (£1928.25).
I'm a little confused as to how this would be demonstrated in somebody's accounts.
My self employed friend has given me 2 years of his audited accounts to look at for practice and then told me this is what he did during 2010, but will only let me look at his 2009/10 accounts once I've figured it all out. This is supposed to be good practice for me so I can make sure what I'm doing is actually what's already been done by his paid accountant.
This is what I think................
I think as the van was bought in April 2008 for £3,500 and had £700 depreciated in 08/09 year, this left the WD value as £2,800. As he sold it for £2,560 there was a loss of £240. I've tried looking at doing a 'dummy' T account, but am getting myself mixed up because when I do the T account and move the depreciation expense and WDV into the disposal account, that gives me £3,500 so to compare that with the other side of the disposal account of £2,560 it gives me a figure of £940 (loss) to go into the P&L account.
I know I'm going to be 50% wrong here
I'm completely at a loss as to paying the bank liability off.
I think, assuming there are no loan interest payments claimed during 2009/10, that I either:
1) only allow as expenditure the paying off of the interest on the whole loan or
2) allow the whole balancing loan payment £1928.25 as eligble expenditure for that year.
You can probably tell from the above I'm going round in circles a bit and would really appreciate some advice.
Many thanks in advance.
0
Comments
-
Firstly, the disposal:
Credit Motor Vehicle Cost £3,500
Debit Motor Vehicle Accumulated Depreciation £700
Debit Bank £2,560
Debit Loss on Disposal £240
Then, repayment of loan:
Debit Loan £1,928.25
Credit Bank £1,928.25
I assume the interest would already have been recorded and that the balance in the Loan "T-account" was £1,928.25.0 -
Qwerty, thank you so much.
I've gone back through it again with your answer and can see exactly where I've got myself confused. This is why practice is good for me, so I can build up some 'rea' (aka dummy) experience before trying to move forward further.
Thanks again.
anne
x0
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