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Double-entry of Motor Vehicle

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My friend has his own business where he does as much of his own bookkeeping as possible. He has 'purchased' a van for his profession from a family friend - although no money has been transferred. There has been a gentlemen's agreement that the van can be paid for 'when you have the money'.

 

I myself have probably thought, and over thought, way too hard about the current transaction and the future transaction of payment. 

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Hallerud at Easter
By DJKL
02nd Mar 2021 01:24

Dr asset
Cr liability

Dr liability
Cr bank/cash

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RLI
By lionofludesch
02nd Mar 2021 07:05

If neither you nor your friend can cope with this day to day level of complexity, I would strongly suggest that your friend engages an accountant immediately.

Your friend doesn't use cash accounting by any chance, does he?

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By LukeAWalters
02nd Mar 2021 07:27

Edit:

In April he will be forming a Ltd company and will stop being self employed.

The journals will still be the same:

Dr Asset
Cr DLA
This to introduce the asset

Dr DLA
Cr Liability
To record the liability

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Replying to LukeAWalters:
Psycho
By Wilson Philips
02nd Mar 2021 08:00

Oh dear

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Replying to Wilson Philips:
RLI
By lionofludesch
02nd Mar 2021 08:15

I foresee more tripe being filed at Companies House.

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Replying to LukeAWalters:
Stepurhan
By stepurhan
02nd Mar 2021 08:21

So he is going to transfer an asset that he doesn't strictly own (since he has not paid for it) and a liability that does not properly exist (since it is an unclear "gentleman's agreement") and which is a personal liability anyway.

Wilson Phillip's "Oh dear" is a massive understatement

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By Paul Crowley
02nd Mar 2021 08:39

We assume your friend does not have an accountant
If starting a company a good idea if your friend took that as a trigger to consider appointing one

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RLI
By lionofludesch
02nd Mar 2021 08:54

Has you friend read and understood FRS 105?

Just so that he knows what he's taking on.

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Replying to lionofludesch:
avatar
By frankfx
02nd Mar 2021 10:15

lionofludesch wrote:

Has you friend read and understood FRS 105?

Just so that he knows what he's taking on.

Delia Smith" how to boil an egg"

Google it.

Is essential reading, if one is to comprehend a simple cooking task.

At least to get consistent results.

FRS 105 needs to be understood to prepare simple legal compliant accounts.

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A Putey FACA
By Arthur Putey
02nd Mar 2021 11:23

Dr Drivers side door
Cr Passenger side door

If that doesn't work reverse the entries; if its a van the rear or side door can be substituted for any of the others.

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Replying to Arthur Putey:
Psycho
By Wilson Philips
02nd Mar 2021 13:54

Depends on whether you're driving here or on the continent

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Replying to Wilson Philips:
A Putey FACA
By Arthur Putey
02nd Mar 2021 16:08

That problem resolves if you drive a Piaggio Ape

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Replying to Arthur Putey:
Psycho
By Wilson Philips
02nd Mar 2021 16:33

Ah, but which is the driver's door and which is the passenger's door? I guess that is an example of true 'double-entry'.

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Replying to Wilson Philips:
A Putey FACA
By Arthur Putey
02nd Mar 2021 17:25

Well it depends, hence the advice to reverse the entries if they don't give the desired result. I suppose I could have used the terms offside and nearside then it would be correct for everyone who knew what they mean.

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Replying to Arthur Putey:
Hallerud at Easter
By DJKL
02nd Mar 2021 13:56

That is why European and UK accounts cannot be consolidated.

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