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Thread: Add vehicle to business account without spending money

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    Add vehicle to business account without spending money

    My business was given a vehicle which was invoiced at R50000, but we are not expected to pay the money. I know that I can't record an expense, so how do I balance out the increase in vehicles account?

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    Site Caretaker Dave A's Avatar
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    Was it a donation?
    Or should it be recorded a a loan?
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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    Hi Dave, I guess I can choose between either donation or loan. What would the journal entries be either way?

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    Site Caretaker Dave A's Avatar
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    Well, the value of the vehicle is debited against a fixed asset account for the vehicle.
    The question is what to post the credit entry against.

    If it's a donation, then I suggest the credit is posted against an income received account named "Donations Received".
    If it is financed via a loan which is not expected to be repaid within the next year, the credit is posted against a long term liability account.
    If there is an expectation that the loan is repaid within 12 months, the credit entry should be posted against a current liability account.
    The trouble with opportunity is it normally comes dressed up as work.

    Alcocks Electrical Services | Alcocks Pest Control & Entomological Services

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    Thanks Dave that's a big help. There is always more than one way to skin a cat. I am going with donation, as I think it fits the situation best.
    Thanks again.

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