Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records

Business Tax Tips / Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records
Business Tax Tips / Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records

Client emailedOur Company bought 2 cars  –

  • Holden Cruze for $16,700.00 includes GST/stamp duty/transfer fee          
  • Barina for $12,888.00

We traded in the company car – Holden Commodore for $3000 and the wife’s car for $1500. Daniel has not claimed the $1500 but gave it to the business.

Now both ’new’ cars belong to the company.

Invoice for Holden Cruze is $16,700.00

The $4,500 trade in was netted out of the purchase of the Barina so the invoice is

($12,888- $4,500) $8,388.00 net.

We have in our accounts:-

MV @ cost                             18539.37

MV Accum Depn                  15412.00

Please advise. Thank you.

How to EnterTo keep things simple, we need to set up some new accounts (“NA”) for each motor vehicle, and new accounts for the loans on each car – it is then easiest to leave the final reconciliation and adjustments to your accountant year end.

I assume the 2 MV accounts are only for the Commodore and no other cars. It is good practice to create new accounts for EACH vehicle so the accountant can reconcile at year end with ease!

Separate the Rego (and Insur if included in the deal) from the $16,700 (or you can leave for accountant at year end to pick up).

AKP Case Study*Is the Loan a Chattel Mortgage? – Can mention type of loan in account name as well

Monthly payments – for simplicity, allocate from bank to NA Liability MVeh Loan Fin Co Name (the new finance account).

The old car accounts – Asset MVehicle @ Cost Commodore, and the MV Accum Dep can be left for the accountant to calculate and adjust at year end, in case there are other adjustments he needs to do.

For other examples of entering MV assets in the accounts, see –

Quickbooks – How to go about setting Chattel Mortgage up and accounting for the monthly payments in Quickbooks.

Another Asset Example – How to enter assets in the books

How do I show liabilities for the total borrowed including interest, not just the principle/asset amount?

Need help? Not sure? Call for FREE 30min advice / strategy session today!

0407 361 596 Aust

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email or call 0407 361 596 Australia

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