Hire Purchase accounting question

A Motor Vehicle was purchased a year ago for £15K. £5K was paid as a part exchange for a seconfd hand car, £3K cash and £7K Hire Purchase (over three years). A year later, the vehicle is then disposed of again being exchanged for a car costing £19500. Assuming that depreciation was 25% for the year and part exchange was worth £8K. £3K of HP was left as a liability in the B/S. Could someone advise how I would deal with the outstanding Hire Purchase liability in the balance sheet? Everything other than the HP part would go to a disposals account. I am confused about what to do with the HP.

Sohaib Sandhu

Comments
There are 2 comments. Login or register to view them.

HP liability

AccountingWEB |
AccountingWEB's picture

Thanks Tom

AccountingWEB |
AccountingWEB's picture