285 Company Vehicles

Assets

Fixed

Synopsis

Account 285 is established to record the inventory value of vehicle placed in Company Vehicle service.

Debits

Credits

The Internal selling price of vehicles placed in permanent company service
The Internal selling price of dealer-installed special equipment, modifications, etc., and the labor and materials required for installation
The Cost of vehicles acquired from other dealers for permanent company service

The Cost of company vehicles sold and otherwise disposed of
The Cost of vehicles transferred to used vehicle inventories when taken out of service
The amount of factory credits applied to vehicles placed in Company Vehicle service

Example 1

Record the $30,200 sale of a van from inventory to Company Vehicle service to use as a courtesy van for the Mechanical department. The inventory value of the van is $30,000.

Journal: New Vehicle Sales

Entry:		Debit	Credit
Account 285	Company Vehicles	$30,200
Account 641	Cost of Sales – New Trucks – Internal	$30,000
Account 237	Inventory – New Trucks		$30,000
Account 441	Sales – New Trucks – Internal		$30,200

Example 1A

If state and/or local tax regulations require payment of sales or excise taxes on internal sales, then the following example applies.

Journal: New Vehicle Sales

Entry:		Debit	Credit
Account 285	Company Vehicles	$30,200
Account 641	Cost of Sales – New Trucks – Internal	$30,000
Account 051-05	Company Vehicle Expense (Mechanical)	$1,500
Account 237	Inventory – New Trucks		$30,000
Account 441	Sales – New Trucks – Internal		$30,200
Account 324A	Sales Taxes Payable – Excise Taxes		$1,500

Example 1B

Record the accrual for the CTA/CTP factory allowance on dealer company vehicles used as loaners in the amount of $2500.

Journal: General Journal

Entry:		Debit	Credit
Account 261	Factory Receivables	$2500
Account 285	Company Vehicles		$2500

Example 2

Record the transfer of the courtesy van to used truck inventory in the amount of $5,500. The Accumulated Depreciation is $24,700.

Journal: General Journal

Entry:		Debit	Credit
Account 241	Inventory – Used Trucks	$5,500
Account 355	Accumulated Depreciation – Company Vehicles	$24,700
Account 285	Company Vehicles		$30,200

Comments

A debit balance represents the cost of vehicles set aside for permanent company use, including items such as:

a. Antique vehicles

b. Courtesy vehicles

c. Delivery vehicles

d. Motorcycles

e. Parts trucks

f. Parts vans

g. Tow trucks

Note:

Company vehicles should be transferred to Account 240, Used Cars (inventory) or Account 241, Used Trucks (inventory) as applicable, prior to their sales as used vehicles. Such vehicles should be transferred at the lower of book or appraised wholesale value. Charge any excess to Account 091, Depreciation - Equipment.

Professional tax and accounting advice should be obtained in regard to state and local requirements regarding sales and excise taxes that may be applicable to internal sales.

ONLY ASSETS USED IN THE OPERATION OF THE DEALERSHIP BUSINESS SHOULD BE INCLUDED IN THESE ACCOUNTS.

Cost of assets should include additional items such as:

Expenses incidental to securing title
Installation and construction costs, including interest during construction
Accessories and optional equipment
Freight
Sales Tax