AP1 Question

celticghirl

Hello all,

Working through AP1 progress test and i need to record the following purchase in the fixed assets register

Mercedes XL (Reg: HE10 PED)

Delivery Vehicle £32000.00
Special racking fitted to interior 1200.00
1 fuel tank of Diesel 75.00
33275.00
VAT 5823.12
£39098.12

I understand the VAT can't be reclaimed and must be capitalised however.... should i take the cost of the diesel plus vat out of the figure £39,098.12 - £88.12 = 39.010.00

Any advice appreciated!!

KaySarah

Definitely! The diesel is a Consumable and therefore varies depending on your mileage and other factors. It is not part of the Fixed Asset.
Hope this helps.

janwal

You can claim back the VAT on vehicles used for work, ie vans but not on cars as they can be used for private use as well. so in calculation the amount to go in the fixed asset register is 32000 + 1200 = 33200, but not 100% sure about the 1200 as not done any with special modification shown seperate.

Jan

celticghirl

hi guys, thanks for the swift replies....

i'm thinking the racking fitted to the interior should be included as it enhances the value of the asset as stated in FRS15

It doesn't state whether the vehicle is a car or van so i googled it....it is a car (a very nice one!), therefore the vat should be in there too

Jan, are you of the opinion the vat shouldn't be included?

janwal

I went by the question saying it was a delivery vehicle, i assumed it meant for delivery goods and you can claim on that .

Jan

celticghirl

aaah ok, i think it's probably the delivery of the vehicle .....good point though!!

Celticghirl

KaySarah

£30,000 to deliver the vehicle? Is it being flown in by Jumbo Jet? haha ..
The Q clearly states it is a Delivery vehicle not a delivery charge - therefore it is classed as a Commercial vehicle (VAT reclaimable) - you wouldn't be expected to Google the make & model in a Test. The modification was done prior to delivery, therefore forms part of the Fixed Asset Value. My initial answer remains unchanged - £32,000 + £12,000 is the value of the Asset, the diesel is a consumable expense and the VAT is reclaimable. ps. VAT is reclaimable on Cars IF they are taxi's.
Good Luck with your exam :-)