Car purchased by Partner by taking Car loan. Loan sanction lettre and RTO Registration Certificate is in the name and address of Partner and firm is paying EMI .Will the Car can be treated as Fixed Asset of the Firm. And Will Car loan be treated as firm's liability. Needed Experts view.
8 Replies
kamal kishor sen
(STUDENT Rajasthan)
(2156 Points)
Replied 24 June 2011
IF CAR IS USED FOR FIRM PURPOSE THAN IT SHOULD BE TREATED AS FIXED ASSETS, EVEN CAR IS PURCHASED ON ANY NAME OF PARTNERS OF FIRM , AND LOAN IS TREATED AS LIABILITY OF FIRM BUT THERE IS ONE CONDITION i.e. ALL PARTNERS MUST AGREED ON THAT .
because at the time of admission when partner bring any assets just like car, furniture, etc.than it will be debited(fixed assets) and partner account credited.
wait for others expert comments
CA ADITYA SHARMA
(CA IN PRACTICE )
(16719 Points)
Replied 24 June 2011
car on the name of partner can be used in business . and all the expenses can also be claimed
CS,CA F,Numrologi TusharSampat
(CS CA F Numerologist Astrologer Graphologist Face reader Vastu Expert)
(85930 Points)
Replied 24 June 2011
| Originally posted by : future ca | ||
 |
car on the name of partner can be used in business . and all the expenses can also be claimed |
 |
AGREED.
Aparna Raja K.C
(Student)
(520 Points)
Replied 24 June 2011
Car can be considered as an asset of the firm and partner can calim the expenses...
:)
even on a later, car can be used for meeting any liability of firm :)
it will have all the characters of being a fixed asset :)
Pulkesh Mehta
(Chartered Accountant)
(243 Points)
Replied 24 June 2011
Car can be incorporated in the books of firm but auditor of that fiirm has to mention in Notes to Accounts of his Audit Report that car is on the name of Partner.
chaitanya cherukuri
(Articled Student)
(241 Points)
Replied 26 June 2011
In my opinion, car cannot be treated as a asset of a firm... Just because the firm is using car we cannot say that car belongs to firm.
One thing is for sure, LOAN in the name of a partner cannot be treated as firms liability at any case. You are sure to face problems with IT dept.
Instead, this trasanction can be dealt with as follows.
1) Car transfered to firm by partner, formally: car can be taken over by firm either by crediting loan account
or capital account.. Accounting entry can be as follows.
Car a/c dr
To partner loan a/c
or
To capital a/c.
When emi is paid, that emi can be treated as loan repayment or drawings.
2) Car Taken on rent by firm: here without showing Car in firm asset list, EMI paid to bank can be treated as rent paid to partner. If fair rent of car is more or less than EMI then the balance can be transfered to partner capital account.
Whatever way option we choose that shall show actual position considering the legal requirements.
Priyanka Bhatnagar
(Accounts & Finance)
(44 Points)
Replied 27 June 2011
Car to be capitalized, Loan to parteners to be treated as loans & advances. Loan not to be treated as firm's liab. EMI can be recovered from the partners compensation. Interest also will be charged on the loan to partner.
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