A company is giving car loan to employees from own cash and bank balance and recovering almost 60% of the loan by way of down payments and equal installments over the 5 years period.
The car is on company' name and it's claim depreciation on it. And it's treat the amount deducted from salary and down payments made by the employee as current liabilities under balance sheet . Is this presentation correct and if not what will be the presentation in balance sheet?
What's the substance of this transaction?
What about 40% of the loan?
How can the co. claim depreciation?
Company bears the remaining amount of loan and the car is in company's name which the company transfer after the installment period ends.
Under which head it should show the advance received from employee in balance sheet.
And what will be the entry at the time of transfer of car to employee.
Its journal is
Income received a/c dr.
To employee a/c
(Income being received from the employee)
Jawahar and Associates Chartered Accountants
Hyderabad
CA Inter
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Gowra Ventures Pvt Ltd
Hyderabad
CA
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CAclubindia
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