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Accounting treatment for purchase on installment basis

Roopesh Gangisetty (Article trainee) (176 Points)

22 September 2014

Dear All,

One of my Client purchased CAR on Installment basis, for where 3 Installments were made in Current year.

Now How shall I have to disclose in Accounts and Can I claim Depreciation. Can I claim IT Depreciation?/

Please let me know your response.

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3 Replies

Ankita CWA Final Student (Principle Internal Auditor) (348 Points)
Replied 23 September 2014

if you purchased car in before 180 days from closing date of current year than u can claim depreciation fully otherwise you can claim 50% depreciation in current year. Vehicale a/c Dr to Bank Loan A/c bank loan a/c Dr (entry for Installment paid) to Bank a/c Cr Depreciation A/c Dr To Profit and loss a/c Important note : for example rate of depreciation is 10% if car is bought before 180 days from 31st march 2015 charge depreciation @ 10 rate and otherwise charge depreciation at 5%rate

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Ashi (Others) (33 Points)
Replied 23 September 2014

You do not have to worry about the installments paid. If the car is purchased and shown as business asset just claim the half of the rate of depreciation as it is in business for less than 180 days.

You can claim IT deduction.

- Ashi (www.meritranker.com)