Asset category: Vehicles
Cars, vans and motorcycles owned by the company, depreciated straight line.
In detail
Vehicles covers cars, vans, buses and motorcycles the company owns, depreciated straight line over about eight years, with cost in Vehicles - YFF. Registration, road tax paid at purchase and the first insurance are part of the cost to capitalise; later insurance and fuel are expenses. For a tour company the vehicle is often the largest asset, so the monthly depreciation is a big line in the Profit and Loss. When the vehicle is sold, the buyer's price against the net book value gives a gain to Gain on Disposal of Assets - YFF or a loss to Write Off - YFF. Keep the bluebook number in the Asset record for the audit file.
Formula
Monthly depreciation = (Cost - Salvage value) / Useful life in months; (Rs 45,00,000 - Rs 5,00,000) / 96 = Rs 41,666.67
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Depreciation - Property, Plant and Equipment - YFF | Rs 41,666.67 | |
| Accumulated Depreciation - YFF | Rs 41,666.67 |
How to record it in BRAccount
- 01Go to Assets > Asset Category and open Vehicles; check accounts and useful life.
- 02Record the purchase through a Purchase Invoice including registration costs.
- 03Open the draft Asset, enter the salvage value you expect at resale, and submit.
- 04The schedule posts the entry below monthly.
- 05On sale, create a Sales Invoice for the asset item and link the Asset; the gain or loss posts.
When to use it
Pick it on vehicle purchases; registration costs can be capitalised too.
Example from the demo books
A tour van of Rs 45,00,000 over 8 years.