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Thread: Disposal of vehicle

  1. #1
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    Disposal of vehicle

    Assistance will be highly appreciated. (bundling them all)
    Sale of vehicle of vehicle entries on pastel

    Question 1 - Disposal of a vehicle
    Vehicle settled by company directly
    Settlement value is 75k
    sold value is 70k
    DT Installment Sale account with 75k (contra Cash book)
    CT Installment sale account with 70k (contra cash book)
    take balance to pft/loss of non current asset?
    What do I do with motor vehicles at cost and depreciation to take it out.

    Question2
    What is the difference if the 70k is paid directly to the bank ?

    Question3
    Second question is with regards to disposing of other assets like office equipment? What entries will be used there for instance if a computer was bought for R3000 last year and getting sold for R 1000 this year? no depreciation was done

    Question 4
    with vehicles and equipment - these are all second hand goods and therefore no vat is invoiced or collected?

    Thanks in advance

  2. #2
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    Entries for all non-current asset disposals (ignoring VAT issues):

    Debit: Disposal Account (Income Statement) with original cost
    Credit: Non-current asset cost (Balance Sheet) with original cost
    Debit: Accumulated Depreciation with balance at disposal date
    Credit: Disposal Account with accumulated depreciation balance
    Credit: Disposal Account with total proceed
    Debit: Related finance liability account with settlement, if settlement is less than proceed
    Debit: New finance liability account with excess proceed if any

    If finance debt is not involved, then the debit is in the bank

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    Thank you Clive

  4. #4
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    Quote Originally Posted by krimpie View Post
    Question 4
    with vehicles and equipment - these are all second hand goods and therefore no vat is invoiced or collected?
    If you are VAT registered, VAT may be claimed when purchasing second-hand goods from a non VAT vendor. Have the seller complete and sign a VAT264. This is your supporting document to claim VAT where you would have used a VAT Invoice if the seller was VAT registered.

    Refer Section 20(8) of the VAT Act.

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    Thanks Beancounter

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