[Question] Vehicle bought on HP

[Thiru]

Good Day ,

Please could I have assistance with the following

My company purchased a vehicle on Credit with accessories and a discount how do I journalize this entry on Pastel

Does the accessories to vehicle also go into the Asset account or is it captured else were

Thank you

[Andromeda]

Hi Thiru,
Assume no deposit is paid:
Credit the HP Long Term Liability with the total amount financed.
Debit VAT on Capex purchases with the VAT reflected in the sale agreement
Debit Motor Vehicles at cost with the balance (there can be initiation fees and other other bank charges, but you may capitalise them, including accessories)

The monthly payments you debit to the long term liability account.

Either monthly or annually you Debit the finance charges in the Income Statement and Credit the long term liability account.

I have assumed it is a delivery type vehicle. If it is a passenger vehicle then there is no VAT entry.

[Thiru]

Thank you so much,this helped me alot