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Car loan given to employees

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Rohit Kumar

25 Points Posted on 03 July 2023

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?

Replies (7)

Quick Summary

This discussion examines the accounting treatment for car loans provided by a company to its employees using its own funds. It questions the correct balance sheet presentation, particularly regarding depreciation claims when the car is in the company's name and how the remaining 40% of the loan is handled. The thread explores whether this constitutes a loan to the employee or a purchase by the company, and how advances from employees should be classified.

Manish

839 Points Posted on 03 July 2023

What's the substance of this transaction?

What about 40% of the loan?

How can the co. claim depreciation?

Rohit Kumar

25 Points Posted on 03 July 2023

Company bears the remaining amount of loan and the car is in company's name which the company transfer after the installment period ends.

sabyasachi mukherjee

Profession

19974 Points Posted on 04 July 2023

THERE CAN BE TWO IOTIONS
1. LOAN TAKEN BY THE EMPLOYEE
2. LOAN WILL BE REPAID BY EMPLOYEE
3. IN CASE NOT REPAID WILL BE TAKEN BY COMPANY.

Pankaj Sarkar

119 Points Posted on 04 July 2023

My suggestion

as it is purchased by company,,,can claim depreciation

after five years company can show sales

advance received from employee can show in balance sheet