My client bought a second hand car (an instalment sale over 60 month). I took over the books and I am not 100% sure if this is booked correctly.
1. The instalment amortisation schedule amount is incl. interest in the books as a bank asset (credit)
2. The deferred finances charges (interest) are booked as a bank asset (debit)
3. The car dealer invoice for the same car is booked (excl. VAT and finance charges) as an fixed asset for Motor and Vehicle (debit)
4. The depreciation is booked accordingly over 5 years (credit)
What is an instalment sales? Liability as we still owe the money to the bank or must this be booked as an asset?
They declared the VAT on the purchase and SARS didn't accept the amount, can the company claim the VAT in full in the month of the purchase?
What is the useful life for a second hand car?