Car purchase through Hypothication

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Chupita

Chupita (Querist)
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11 August 2010 kindly guide for accounting entry for car purchase through Hypothication

CA SMR

CA SMR (Expert)
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11 August 2010 Since Hypothecation is just a lien over an asset agreed upon as a security towards the purchase of the car,the accounting treatment may not be affected because of its presence.More expert opinion is solicited.

Nitin

Nitin (Expert)
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11 August 2010 Yes except the fact the loan amount will be shown under Secured Loans.Accounting entries;

CAR A/C X
TO DEALER X

DEALER A/C X
TO ABC BANK LOAN A/C Y(LOAN AMOUNT)
TO CASH/BANK(PAID FROM YOUR OWN END)

WHEN EMI PAID

ANC BANK LOAN A/C (PRINCIPAL AMOUNT)
INTEREST ON CAR LOAN(INTEREST AMOUNT)
TO BANK A/C (EMI AMOUNT)

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Chupita

Chupita (Querist)
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11 August 2010 Thanks for your prompt reply. There is loan Principal amount & Interest JV & down payment which we had paid etc....

Chupita

Chupita (Querist)
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11 August 2010 Thanks Nitin to guide me... Thank you once again