Capitalisation and VAT

clio

Sorry if I'm being dense. I understand why VAT is not part of the Capitalised figure if you can reclaim it. The example I have been given puts ex vat cost through Bank and onto Machine at Cost in Ledgers. Fine. How do I record VAT amount which does come out of the Bank Account even if it is reclaimed at a later date. Otherwise I am not going to be able to reconcile surely?

PeterC

You seem to recognise that the amount net of VAT is credited to Bank and debited to Machine at Cost. The VAT is credited to Bank and debited to VAT account

clio

A separate entry. I thought so. Just there was no mention of it at all in the example I had. Thank you.

PeterC

You're welcome