05 February 2010
whether VAT is an asset or liabilities? Answer # 1 It is both an asset and liability.When it is collected from purchaser it is a lisbility for seller and an asset for purchaser.
05 February 2010
A Trader's point of view:- if seller (A) collect VAT from purchaser (B) it is his (A) liability to pay it to the government. but at the same time when this seller (A) has purchased the same goods from another supplier for trading (C), which is sold to purchaser (B) now, he (A) would have been paid VAT on it to (C). This vat is sellers (A) Asset (this is termed as VAT Input Credit). he can adjust this VAT Credit against his VAT liability (which is collected at the time of sale to B). This is the concept of VAT. So for a trader or Manufacturer who paid VAT on his raw material and collect vat on his sale. The vat can be both asset and liability.
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