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Accounting entry in rent a car business

shabaz (Ca Final , Mcom) (80 Points)

07 May 2012

Friends, I want to know whether i have to record my cars used in business as current asset or fixed asset ?. What will be the entry when the customer is returning the car after the rented period ? Do i need to record the transaction as sale or service charge?

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4 Replies

Sonu Kumar (Account Manager) (665 Points)
Replied 07 May 2012

When ur Car is being return by customer then no need to pass a journal entry. ur Car will be a fixed assets on which u ll charge depriation, ur income will be come under hire charges ( Service) as well as u ll charge service tax on it

shabaz (Ca Final , Mcom) (80 Points)
Replied 07 May 2012

Sir if i do so, then how can i get the physical number of cars in my hand as on a particular date.

Satya Mishra (CA FINAL) (105 Points)
Replied 15 May 2012

Dear Shabaz u need to maintain accounts as per AS-19. its a nature of operating lease. u should treat ur Cars as fixed asset and charge depreciation. Hire chareges should be treated as Incomes. About no. of cars in hand in a particular date should be all the cars u have. u have just rented to partys not sold to them. ownership lies with u only.

antonov2015 (MBA) (26 Points)
Replied 26 June 2015

There are plenty of good gps apps, but I didn't find a decent free app on my iPhone that shows info about car rental companies. There is a good paid version https://itunes.apple.com/us/app/car-rentals-market-app/id878633650?ls=1&mt=8, but it's too expensive for me. Does anybody know a good free version?