How to calculate depreciation of loaned vehicle

A/c entries 1205 views 5 replies

Jacky Singh

Assisstant

107 Points Joined November 2009

Hi,

Suppose I have bought a vehicle having value of Rs.2,00,000 on July 2010 on installments, thus I paid only Rs.50,000 till March2011, so what will be the depreciation amount to be entered in accounts. Also, how will the entry of vehicle will be done in accounts. I mean, in final balance sheet, will the amount of vehicle in fixed assets be Rs.50,000-depreciation amount, or Rs. 2,00,000-depreciation. If later is correct, then how I'll have to show its entry in accounts.

Please explain. Thanks in advance.

Replies (5)

Bhaskar Unnikrishnan CPA CMA

Accounts / Administration

414 Points Joined August 2011

For Depreciation, you have to show on asset side as 2,00,000-Depreciation and loan amout should be shown on the liability side of the balance sheet.

Journal entries can be,

Vehicle a/c Dr. 2,00,000

To Cash 50,000

To Party 1,50,000

For Depreciation:

Depreciation A/c Dr.

To Vehicle

Jacky Singh

Assisstant

107 Points Joined November 2009

Thank you very much. This was the answer I was seeking. But can you please tell to which group will Party to which further loan amount is to be paid, falls. I mean, unsecured loan or creditors or else

CA Sachin Rastogi

Audit/IFRS Manager

338 Points Joined September 2009

If the vehicle is mortgaged to the party then payable to party is a secured loan else its an unsecured loan.

Bhaskar Unnikrishnan CPA CMA

Accounts / Administration

414 Points Joined August 2011

Originally posted by : Sachin Rastogi
	If the vehicle is mortgaged to the party then payable to party is a secured loan else its an unsecured loan.

Agree to Sachin.....

Ateeq

CA - Final

218 Points Joined September 2008

It will be a secured loan only as till the payment of last instalment, ownership lies in the hand of the Vendor. So in my opinion treat the same as secured loan.