12-30-2009, 07:38 AM
Can anyone tell me what is the nature of the following transaction and how to account for it!!
A company purchase vehicle for its employees with a term that an amount will be deducted from the salary of employee and the total deductions will be equal to the cost of vehicle.
At the time of purchase passd entry
Vehicle DR
Cash CR
and on each year end Depreciation is charged and contribution from employee is treated as a liability
Cash DR
Car financing CR
and after repayment of full principal vehicle is transferred to employee and disposal is recorded.
I knw above treatment is wrong and results in tax evasion..can any one tell me wht will be de correct treatment ? shall we account for it as finance lease IAS 17? or Loans and Receivable IAS39
A company purchase vehicle for its employees with a term that an amount will be deducted from the salary of employee and the total deductions will be equal to the cost of vehicle.
At the time of purchase passd entry
Vehicle DR
Cash CR
and on each year end Depreciation is charged and contribution from employee is treated as a liability
Cash DR
Car financing CR
and after repayment of full principal vehicle is transferred to employee and disposal is recorded.
I knw above treatment is wrong and results in tax evasion..can any one tell me wht will be de correct treatment ? shall we account for it as finance lease IAS 17? or Loans and Receivable IAS39