How to account for renting a passenger vehicle?


When a business leases a private vehicle called a passenger vehicle for the purpose of its business, it must account for this rental. It is an obligation. For best accountancy training Best school of accountancy In Lahore. How to account for financial rents? Focus on this particular device.
Accounting for rents and royalties
Sometimes a passenger vehicle is rented out by a company as part of its business. In this case, we are talking about rent payments because the company pays money each month to benefit from the vehicle. Of course, these must be accounted for by the company. You have to debit account 6135 Rentals, and credit account 401 Suppliers. However, the accounting system is different when it comes to a lease, and therefore a royalty. Account 6122 Leasing Mobilier must be debited and credited to account 401 Suppliers.
Vehicle accounting
The recognition of the call option exercise
The lease sometimes provides for a call option . In this case, the company eventually raises this call option, thereby becoming the owner of the vehicle . The price of the exercise of the call option is defined at the beginning of the lease of the vehicle. In Accounting , account 2182 Transportation Equipment must be debited and 404 Capital Supplies Account credited. When the bill is finally settled, account 404 is to be debited and the 512 Bank account is credited . Finally, the vehicle must be depreciated by deducting account 68112 Depreciation, amortization and provisions for tangible assets and crediting account 28182 , Amortization of transport equipment.

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