Pre Registration VAT recovered on Fixed Assets

Pre Registration VAT recovered on Fixed Assets

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My VAT control account is £1,200 too high as a creditor on the Balance Sheet due to pre registration VAT recovered on a Van bought in March'07 and recovered in Jan'08.
If I debit the control account, do I then credit the fixed asset cost?

The Van was bought at the end of the last financial year, so I have a cost brought forward, but if I reduce the cost by £1,200, how do I show this on the fixed asset note?

Any help would be very much appreciated.
Thanks,

Laura

Laura Gregory

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Euan's picture
By Euan MacLennan
11th Dec 2008 17:19

Yes
Of course you must credit the fixed asset cost if you have subsequently reclaimed VAT on the asset.

Show it as a deduction from cost described as "VAT reclaimed". Show the corresponding adjustment to depreciation as "Adjustment for VAT" and calculate the charge for the year on the NBV brought forward excluding VAT.

It is fairly self-explanatory, but you could add a footnote to the fixed asset note (not to the accounting policy as that has not changed) to say that VAT has been reclaimed on the cost of an asset bought in the previous year and that the depreciation has been adjusted accordingly.

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By User deleted
12th Dec 2008 15:01

Thanks very much for your help.
I guess that common sense is pretty much the right answer. I wasn't really sure how to lay out the fixed asset note or how to calculate dep'n for the current year but you sorted that too!

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