Truck was bought in 5-06. Repossessed in 6-07. Has anyone ever heard of converting payments to rental expense instead of depreciation etc? Am working on 06 books, then 07 to close down in oct. 07. Same question regarding estate that has been foreclosed on. Can payments on houses be converted?

Payments on a truck shouldn't have been going to depreciation anyway. They should have been split between coming off the note and what was going towards interest expense. The depreciation is an entirely different issue, separate from payments.

Having gotten repossessed doesn't turn it into a rental. You have to reverse out all associated accounts (truck, accumulated depreciation and the note), and the difference of all that is some type of loss. Well, presumably a loss since the book value probably was lower that the payments made.

Thank you morgaine300 for your quick response. My poorly phrased question was more in the category of "have you ever heard of this" rather than a how to. My client assures me this is done somewhere in "accounting lala land". Just out of respect for him I sent it on as I have never heard of this. I agree with you. I should have said "car payments" converted to rental payments. I agree no contract no conversion. Meanwhile I can say I have researched this and gotten an answer.