I bought a company vehicle not long ago for £3350 and logged the purchase as an asset (Motor vehicle 0050). I’m now selling this vehicle though for £3000.
How do I log the £350 balance between the original purchase price versus the new sale price?
I’v looked at journals but can’t quite figure them out.
Also, once I sort out the depreciation, how do I log the sale of asset so it doesn’t show on my balance sheet anymore? Is it just done as a sale invoice?
I’m not great at accounts or book keeping. Just something we’ve all got put up with in business so any help would be very much appreciated.
You would need a journal to reverse the original purchase amount and the accumulated depreciation, and post the difference (essentially the net book value of the asset) to 4200 Sales of Assets. For example, if the accumulated depreciation was £500 then you would journal
Credit 0050 Motor vehicle £3350 (to get it off your balance sheet)
Debit 0051 Motor vehicle depreciation £500 (or whatever amount you’ve previously depreciated against this asset)
Debit 4200 Sale of Assets £2850 (balancing figure - the NBV)
Then raise a sales invoice, also against 4200 Sales of Assets for the £3000 you sold it for (plus VAT, if you’re VAT registered). After this, the asset will be gone from your balance sheet, and 4200 will show the net profit of £150 (the difference between the NBV and the amount you sold it for - if the book value was more than £3000 then it would show a net loss).
You could do it all with a single journal if you’re not VAT registered, but I think the sale invoice method is (a) simpler to understand anyway and (b) integrates with QuickFile’s VAT handling if you are VAT registered.
(NB I’m not an accountant, check with yours if you want a second opinion - in particular the net gain or loss in your accounts depends on your choice of depreciation method, but the amount you use for tax purposes depends on how you claimed capital allowances against it, which may be different)
Thanks Ian. I’ll give that a try. I am vat registered and it is a company vehicle I’m selling. Am I correct in saying that vat is non applicable to used cars?
Not being vat registered myself (yet, will probably have to register in Feb) I don’t know the rules in that much detail, I suggest you ask your accountant.