Fixed Asset

IF CAR IS USED FOR FIRM PURPOSE THAN IT SHOULD BE TREATED AS FIXED ASSETS, EVEN CAR IS PURCHASED ON ANY NAME OF PARTNERS OF FIRM , AND LOAN IS TREATED AS LIABILITY OF FIRM BUT THERE IS ONE CONDITION  i.e. ALL PARTNERS MUST AGREED ON THAT .

because at the time of admission when partner bring any assets just like car, furniture, etc.than it will be debited(fixed assets) and partner account credited.

wait for others expert comments

car on the name of partner can be used in business . and all the expenses can also be claimed         

Agreed with future ca

Originally posted by : future ca
	car on the name of partner can be used in business . and all the expenses can also be claimed

AGREED.

Car can be considered as an asset of the firm  and partner can calim the expenses...

:)

even on a later, car can be used for meeting any liability of firm :)

it will have all the characters of being a fixed asset :)

Car can be incorporated in the books of firm but auditor of that fiirm has to mention in Notes to Accounts of his Audit Report that car is on the name of Partner.

In my opinion, car cannot be treated as a asset of a firm... Just because the firm is using car we cannot say that car belongs to firm. One thing is for sure, LOAN in the name of a partner cannot be treated as firms liability at any case. You are sure to face problems with IT dept. Instead, this trasanction can be dealt with as follows. 1) Car transfered to firm by partner, formally: car can be taken over by firm either by crediting loan account or capital account.. Accounting entry can be as follows. Car a/c dr To partner loan a/c or To capital a/c. When emi is paid, that emi can be treated as loan repayment or drawings. 2) Car Taken on rent by firm: here without showing Car in firm asset list, EMI paid to bank can be treated as rent paid to partner. If fair rent of car is more or less than EMI then the balance can be transfered to partner capital account. Whatever way option we choose that shall show actual position considering the legal requirements.

Car to be capitalized, Loan to parteners to be treated as loans & advances. Loan not to be treated as firm's liab. EMI can be recovered from the partners compensation. Interest also will be charged on the loan to partner.