October 30, 2016 admin

Service Loaner Expense—Service

Expenses

SERVICE LOANER EXPENSE—SERVICE EXPENSE ACCOUNT
7760

ACCOUNT EXPLANATION

That portion of total service loaner expense that is allocated to the service department.

Service loaner expense is that portion of the total expense of leased or owned rental vehicles which can be allocated to service loaner usage including monthly lease fees (or depreciation for dealership-owned vehicles), insurance, license fees, maintenance and repairs.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Monthly lease payment for F.R.C.S. or L.M.D.R. for a vehicle in rental service which is also used as a service loaner (that portion which represents use as a service loaner; and portion of that amount which is allocated to the service department) SE
    Service Loaner Expense—Service 7760
      Notes Payable—Rental Vehicles 2540
      Notes Payable—Long Term, Current Portion 2040
             
  Repairs to rental vehicle which is also used as a service loaner (portion which applies to service loaner usage and to the service department) PS
    Service Loaner Expense—Service 7760
      Sales—Parts—Internal—Service 5470
      Sales—Service Labor—Internal 5730
COMMENTS
  • Subsidiary records should be kept to determine how many days each rental vehicle is in use as a service loaner. Refer to instructions provided by the Company for the Service Loaner Program for record-keeping requirements.
  • Allocation of service loaner expense between the new vehicle, used vehicle, and service departments, and the body shop, should be made on the basis of which department benefits from the Service Loaner Program. One method is to divide the expense evenly between the new vehicle department and the service department (or the body shop) when the customer has a vehicle purchased new which is being serviced in the service department (or the body shop)>
  • The used vehicle department should bear a proportional part of service loaner expense if used vehicle purchasers benefit from the program.
  • Dealerships which use rental vehicles owned by the dealership (rather than leased vehicles) as service loaners should charge the appropriate portion of rental vehicle depreciation to this account. See Vehicle Leasing and Rental for a breakdown of supplementary accounts for the rental vehicle portion of the business.