October 30, 2016 admin

Leased Vehicles

Assets

LEASED VEHICLES ASSET ACCOUNT
1610

ACCOUNT EXPLANATION
Cost of new vehicles in wholesale leasing service within the dealership operation, including dealer-installed options and accessories.
TRANSACTIONS
  Jrnl. Dr. Cr.
  New car placed in wholesale leasing service VP
    Leased Vehicles Wholesale 1610
      Inventory—New Cars 1300
             
  Leased vehicle removed from leasing service, transferred to used car inventory at a gain (represented by the excess of wholesale value, less estimated reconditioning, over net book value) G
    Inventory—Used Cars (at wholesale value less estimated reconditioning) 1350
    Accumulated Depreciation—Leased Vehicles 1620
      Leased Vehicles 1610
      Leased Vehicles Net Income 5300
COMMENTS
  • Vehicles placed in wholesale leasing service within the dealership operation should be transferred at inventory value, excluding holdback, and not recorded as vehicle sales. New vehicles sold to a separate leasing organization, independent or owned, should be recorded as fleet sales.
  • Units retired from wholesale leasing service should be transferred to the used car department for disposal. Such transfers should be made at estimated wholesale value (less estimated reconditioning charges) with any difference from net book value being recorded in Account 5300, Leased Vehicle Net Income. Subsequent sales of retired units should be recorded as used car sales.
  • Accurate revenue and expense records should be maintained on each leased vehicle so that existing contracts can be evaluated and employeed in developing future lease proposals.
  • Account 5300, Leased Vehicle Net Income—Wholesale, is a control account to which leased vehicle income and expenses are charged. Supporting subsidiary income and expense accounts are described in Vehicle Leasing and Rental.
  • Tax counsel should be obtained regarding the handling of leased vehicle income and expense for income tax purposes.