fixed asset purchased on installment basis
Tina Jain (CA) (250 Points)
08 March 2018
accounting treatment of asset purchase on installment basis with down payment
6 Replies
Rakesh Bandal
(Self Employed and Agriculture)
(1349 Points)
Replied 08 March 2018
Evenif asset is purchased on Installment system book asset as its full cost in books and provide depreciation as per section 32 of IT Act
Divakar
(Student CA Final )
(11857 Points)
Replied 08 March 2018
Asset A/c Dr.... With total cost... To Bank A/c..(down payment)... To hire vendor A/C(balance amount)...... in next installment.... Hire vendor A/c Dr.... Finance charges A/c Dr... To BAnk A/C(ur installment amount)
Tina Jain
(CA)
(250 Points)
Replied 08 March 2018
hire vendor account need to be credited with interest amount na before making payment to him of installment
Divakar
(Student CA Final )
(11857 Points)
Replied 08 March 2018
Nope... At the time of asset purchase it is credited with cash price... And when installment due... Then do entry with finance charges A/C DR TO hire vendor A/C after that hire vendor A/c dr to bank account with installment amount
Divakar
(Student CA Final )
(11857 Points)
Replied 08 March 2018
Yes u r right it is credited with interest amount at the time of. Making payment
satish
(teaching)
(2046 Points)
Replied 08 March 2018
1. ON PURCHASE OF ASSET ON HIRE PURCHASE (AS ON THE DATE OF PURCHASE)
ASSET A/C DR.
TO VENDOR A/C
2. ON PAYING DOWN PAYMENT (DATE OF PAYMENT)
VENDOR A/C DR.
TO BANK A/C
3. INTEREST CREDITED TO VENDOR A/C (ON DUE DATE OF INSTALLEMNT)
INTEREST A/C DR
TO VENDOR A/C
4. PAYMENT OF 1ST INSTALLMENT (ON PAYMENT OF INSTALLMENT)
VENDOR A/C DR.
TO BANK A/C
5. CHRGING OF DEPRECIATION ( ON THE DATE OF BALANCE SHEET)
DEPRECIATION A/C DR.
TO ASSET A/C
6. CHARGING OF DEPRECIATION AND INTEREST TO PROFIT AND LOSS A/C
PROFIT AND LOSS A/C DR.
TO DEPRECIATION A/C
TO INTEREST A/C
(REPEAT LAST 4 TRANSACTIONS TILL THE PAYMENT OF LAST INSTALLMENT)
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