Vehicles

Code: 1214
👁 Views: 56

Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Value of vehicles owned and used by the company

Note: This account may be broken down into sub-ledgers as needed (e.g., customer/supplier/bank names or branches).

Common Journal Entries

Purchased company vehicle

Dr. Vehicles
Cr. Bank Account

Recorded vehicle depreciation

Dr. Depreciation Expense
Cr. Accumulated Depreciation Vehicles

Sold vehicle at a gain

Dr. Bank Account
Dr. Accumulated Depreciation
Cr. Vehicles
Cr. Gain on Sale

Paid vehicle insurance

Dr. Insurance Expense
Cr. Cash in Hand

📐 IFRS vs US GAAP Accounting Treatment

IFRS IAS 16 Property, Plant and Equipment
US GAAP ASC 360 Property, Plant and Equipment

❓ Frequently Asked Questions

Q: How is vehicle depreciation calculated?

A: Vehicle depreciation is calculated using various methods, the most common being the straight-line method: (Vehicle Cost - Expected Salvage Value) ÷ Expected Useful Life (typically 3-5 years for cars).

Q: Are spare car parts depreciated?

A: Spare parts purchased for normal use and maintenance are expensed when purchased or consumed. Large spare parts stored for replacement of major car components (e.g., a spare engine) may be capitalized as a fixed asset and depreciated.

Q: What is the difference between fuel expense and vehicle depreciation?

A: Fuel expense is an actual cash expense paid when refueling the vehicle and depends on the amount of use. Vehicle depreciation is an allocation of the vehicle\'s cost over its useful life and is a non-cash expense (does not require cash payment when recorded).