HELP ON JOURNALS FOR MOTOR VEHICLE

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
HI CAN ANYONE HELP ME ON THE JOURNALS ON MOTOR VEHICLE JUST BOUGHT ON HP - I NEED TO KNOW THE ACTUAL NOMINALS TO MAKE UP AND HOW TO DO THE JOURNALS.

I USUALLY PUT THE FIRST INVOICE ON AS A SUPPLIER TO FIXED ASSET. BUT NOT SURE HOW TO CLEAR THAT DOWN WITH THE HP COMPANY AND INTEREST??

WOULD APPRECIATE ANY HELP

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    The interest amount is taken directly to the P&L as an expense and is not capitalised, the rest is capitalised the same as any other fixed asset. But you should capitalise the whole asset on purchase and set up a Hire Purchase control account.

    Unless some one else on here does it differently?

    PS NO NEEED TO USE CAPS PEOPLE MIGHT AVOID ANSWERING YOU AS ITS NOT VERY PLEASANT TO READ.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    thanks for replying so quick that is where i have been going wrong so interest only expense as it is deducted monthly - is that correct
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    We always used to debit Fixed Assets and Credit HP Creditors (both balance sheet accounts) with the value of the asset and reclaim the whole VAT at the outset. If there is an administration charge or similar, this is written off to P&L.

    Each month you depreciate your asset as any other asset. The monthly payment is split and the capital element of the charge is debited to HP Creditors and the interest element is written off to HP Interest in your P&L.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    I have read somewhere that how TLG has described it is now how Customs and Excise want it done i.e. total VAT reclaimed at the beginning rather than with each payment.

    Annette
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    NO, you can't claim VAT on motor cars. Check your source. the VAT element is capitalised unless the vehicle is a VAT of certain size. You need to look at C&E booklet.

    As to HP transactions, I will post the solution later as my boss is in in and I need to do some work for her.



  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    Oh, xfsgpr! You do seem to want to be pedantic on my postings today!!

    OK, the way I described Motor Vehicles is the way I do it for Volvo FH12 Cabs - they are the bloody great big things that pull trailers. They are also motor vehicles. They are soley for business use and the VAT can be reclaimed. The posting referred to motor vehicle not motor car. As discussed on a previous thread, VAT on motor vehicles used soley for the business can be reclaimed.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:HELP ON JOURNALS FOR MOTOR VEHICLE

    Again I agree TLG I had already assumed that it was a taxi or van or something where VAT was reclaimable.

    Annette

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