Glad it helped! If you just discard it the entries would be exactly the same but with no bank entry :) so effectively the full net book value would go to P&L as an expense.
You’re very welcome. So the way HMRC define this is as follows: you supply services or goods and receive other goods or services in payment, there are 2 separate supplies: the supply from you to your customer the supply from your customer to you. You must account for VAT, and so must your customer if they’re VAT-registered. You must both account for VAT on the amounts you would each have paid for the goods or services if there had been no barter and they had been paid for with money. So what they’re saying is from a VAT perspective you record the VAT as if you sold the vehicle (that you’re part exchanging) to them. Then record the VAT on the vehicle you’re purchasing. So it would be two separate transactions. Hope this helps!
Hi, so definitely not one that will be tested within the AAT syllabus but for reference if that were to happen. Calculate the percentage of the asset for sale and the disposal entries would follow for the same process as within the video. This would then leave you with the remaining amount of the asset you owned. I would then revalue the remaining portion of the asset but just be aware you'd then have to revalue all assets within that particular class (for example equipment). Revaluation is something you'll cover during your level 4 studies within the Financial statements unit.
thankyou, very helpful
Clear and concise, love it :)
So helpful thank you!
Hi mate,
Thanks for the video! You did the breakdown as if the asset was sold, can I ask what if you’re just discarding the assets?
Thanks :)
Glad it helped! If you just discard it the entries would be exactly the same but with no bank entry :) so effectively the full net book value would go to P&L as an expense.
Thank you soooo much!!!!! Any advice on part exchanges and VAT? My kaplan exam kit book had them in and completely threw me 😭
You’re very welcome. So the way HMRC define this is as follows:
you supply services or goods and receive other goods or services in payment, there are 2 separate supplies:
the supply from you to your customer
the supply from your customer to you.
You must account for VAT, and so must your customer if they’re VAT-registered. You must both account for VAT on the amounts you would each have paid for the goods or services if there had been no barter and they had been paid for with money.
So what they’re saying is from a VAT perspective you record the VAT as if you sold the vehicle (that you’re part exchanging) to them. Then record the VAT on the vehicle you’re purchasing. So it would be two separate transactions.
Hope this helps!
At 7:21 of video you have made a mistake. You should have put ‘Bank” in the narrative of disposal a/c instead of ‘disposal’
What if half of the non-current asset was sold. Meaning two people own it.
Hi, so definitely not one that will be tested within the AAT syllabus but for reference if that were to happen. Calculate the percentage of the asset for sale and the disposal entries would follow for the same process as within the video. This would then leave you with the remaining amount of the asset you owned. I would then revalue the remaining portion of the asset but just be aware you'd then have to revalue all assets within that particular class (for example equipment). Revaluation is something you'll cover during your level 4 studies within the Financial statements unit.