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Equipment Leasing how to account for it in Xero

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I am the bookeeper for a takeaway shop and they have purchased motorbikes for delivery purposes on finance

They have paid 404.70 in a deposit (inclu VAT)  for each bike

And financing 3192.30 which they pay monthly for.

I have put the monthly payments under motor vehicles.

But i'm not sure how I account for the finance part (I use Xero)

Pretty new to this so any help would be appreciated.

Thank you

Replies (10)

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By Duggimon
08th Mar 2021 16:04

Is it a standard HP agreement for bikes costing £2,997.50 + VAT?
Are the bikes used solely for business?

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By TraceyF1980
08th Mar 2021 16:28

Hi,

Yes and yes just used for takeaway deliveries.

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Replying to TraceyF1980:
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By frankfx
08th Mar 2021 18:20

Are you sure?

Where are the bikes parked overnight.

" Available" for private use..... Commute home to shop

Are the bikes shared by workers on shift pattern.

Are the workers employees?

Or self employed, with worker status.

Or workers, provided with motor bike ,which is rented to them. Plus VAT.

What does insurance policy cover?

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RLI
By lionofludesch
08th Mar 2021 18:24

Is it a company or an unincorporated business ?

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RLI
By lionofludesch
08th Mar 2021 18:27

You say in the title it's leasing, then you say the bikes have been bought on finance - which is it ?

Is there any interest ?

Is there any VAT ? What does the invoice say ?

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Replying to lionofludesch:
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By TraceyF1980
09th Mar 2021 14:09

Yes the bikes are on finance (i've got another invoice for equipment leasing which i'm also dealing with !!) I think i've got is sorted now so thankyou for your help.

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By adam.arca
09th Mar 2021 13:13

I'm not going to tell you exactly how to do this because there's several different ways this could be handled (and the "correct" way is a bit complicated to explain).

So, just do what makes sense to you but (vital point this) ensure you carry on doing it that way: accountants don't mind people being wrong as long as they're consistently wrong the same way. Also, don't hide the transaction somewhere obscure, so I would say posting it to motor vehicles would be fine as that will definitely get looked at by the accountant.

NB: what I've just said ONLY applies if you're using Xero simply as a bookkeeping system and a way of reporting your VAT. If you want to use it for periodic accounts, then you're going to need to do more and you'll need more understanding of what you're doing.

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Replying to adam.arca:
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By lionofludesch
09th Mar 2021 13:37

adam.arca wrote:

I'm not going to tell you exactly how to do this because there's several different ways this could be handled (and the "correct" way is a bit complicated to explain).

>

There are too many unanswered questions to say what the correct way might be.

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Replying to lionofludesch:
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By adam.arca
09th Mar 2021 13:51

lionofludesch wrote:

There are too many unanswered questions to say what the correct way might be.

Indeed! We know that and the OP may well realise that too now given the pointers in the first few replies.

My comment was, though, just a more general one that a) accountancy / bookkeeping isn't a Delia-type cookbook, more of a TV-chef "do what feels right" experience, and b) it's really not that important to get it 100% right first time.

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By TraceyF1980
09th Mar 2021 14:07

Thank you for your help and advice, I think i've got it sorted now.

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