bank liabilities and selling of assets.
annefreeman
Settling In NicelyRegistered Posts: 21
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.
Comments
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.
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
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