ACCOUNTING TREATMENT

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A firm purchased a car using a loan, and the seller's books show a bank receipt exceeding the car's price, with a significant processing fee. The discussion suggests that all associated charges, including the processing fees, should be capitalised and included within the car's asset account. This ensures the asset is recorded at its total cost.

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(Querist)
25 January 2020 A Firm has purchased a car of Rs. 1830396 on loan of Rs.1700000. Firm's account in Sellers book is showing receipt from bank amounting to Rs.2004766. Processing Fees has been debited with Rs.304766.
Please suggest correct accounting treatment along with journal entry.
Thanks.
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RAJA P M

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RAJA P M (Expert)
25 January 2020 Book all the charges in Car's account and transfer as per ledgers.
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Gokul Sharma

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Gokul Sharma (Expert)
25 January 2020 yes ..........all other charges should be included in car a/c
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