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Home > Business & Careers > Accounting   »   Accounting for a vehicle cash purchase

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Old Apr 28, 2008, 02:22 PM
Ana Dowdy
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Accounting for a vehicle cash purchase

I purchased a vehicle for 3,200.00; add. 55.00 Doc Fee 50.00 smog pd to seller 239.61 sales tax = 3,544.61. To that add 30.00 Reg/Trans Fee and 8.25 for smog fee pd to State=3,582.86 Less 500.00 Discount I Paid a total of 3,082.86 cash. Which amounts are capitalized?
Thanks, Ana

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Old May 3, 2008, 01:55 AM   #2  
Nazib
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Vehicle account Dr. Rs 3582.86
Cash Cr. Rs 3082.86
Discount Cr. Rs 500.

If u need further details i'll b hapy help
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Old May 3, 2008, 08:55 PM   #3  
morgaine300
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I'm going to disagree about the discount needing separated. If you got a discount on something, that can come directly off the cost of something. After all, that's your "cost" of the item, isn't it?

As a general rule, all costs to buy, transport and somehow make ready a plant asset are considered part of the cost of the asset. The registration fees and smog fee (smog fee? really?) could be in controversy. I would say if the original smog fee was paid to the seller because they were behind on the fees and they were charged at some pro-rated basis or something, that could probably be part of the cost. However, the other ones you paid in addition to that I'm not sure I'd count in the cost, simply because these are probably yearly fees you would always have to pay anyway, right? My yearly registration fees on my car are an expense and not part of the cost of getting the car. A fee directly related to getting the car could be counted. (Like that "doc fee" whatever that is. Presumably for making up paperwork for the sale?) The sales tax definitely counts.

The original person answering is from India. Where are you located? Different locations can do things in different manners. I'm in the U.S. and if you are not, the information I've given may not be appropriate either. (I'm sure most posters are in the U.S., but far too easy to forget some people are not and I do that all the time. :-)
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