Help with VAT on Disposal and Part Exchange

jow774
jow774 Registered Posts: 465 Dedicated contributor ๐Ÿฆ‰
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 ๐Ÿ˜
    Possible credit disposals with the net, credit vat and debit bank with the cash received?
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor ๐Ÿฆ‰
    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 ๐Ÿฆ‰
    So lets say Old Vehicle cost ยฃ15,000, accum depn is ยฃ7,500. New vehicle cost ยฃ14,500 (inc VAT) and Part Ex value on old vehicle is ยฃ5,000 (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 ๐Ÿ˜
    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 ๐Ÿ˜
    You can claim VAT back on commercial vehicles such as vans and lorries.
  • Esme
    Esme Registered Posts: 711 Epic contributor ๐Ÿ˜
    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 ๐Ÿฆ‰
    But that leaves you with a debit entry for the VAT doesnt it? I am soooo confused.
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor ๐Ÿฆ‰
    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 ๐Ÿ˜
    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 โญ
    Esme wrote: ยป
    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 ยฃ5000+bank14500 in Debit of COst account. is my way wrong?

    thanks
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