Capital Purchases and Finance in AccountRight

[PhilipK3288_]

Hi @ronatbas 

Thank you for the detailed guide.

I also have the same question as  @georgieh and  @CarmenA1. 

We have the complete amortization schedule.

After apply repayment of loan through Spend money to principle 2-2100 and interest 2-2105, we find the principle balance is reducing but the balance for unexpired Interest (negative amount) is growing. 

We worried by continue the steps, the principle amount will redue to "0", however the unexpired interest will be duble when meet maturity.

We are wondering if we missed some steps?

Looking forward for your reply, thank you.

Sara

[AshMyob]

Hello @ronatbas 

Would I  claim GST 1-11th to the Luxury Car Tax limit on purchase with tax code as CAP? 

Will GST registration on cash or accrual affect this? 

How would i treate GST on every instalment payment? 

Thank you all

Ash 

[LRBooks61]

Hi

If you have the  amortization schedule you can reduce the unexpired interest.

When you record the repayment it should be recorded this way

eg repayment $2500 interest component $250

DR 2-XXXXLoan account  2500 N-T

CR 2-XXXX unexpired interest            250 N-T

DR 6-XXXX interest expense account  250 FRE

[LRBooks61]

Hi Ash

Yes you do claim 1/11th of the cap for luxury car tax and you use CAP.

Whether you use accrual or cash the GST is claimed at this stage because you are claiming it all up front.

So the instalments are then coded against the loan and unexpired interest and the interest expense as per below:

If you have the  amortization schedule you can reduce the unexpired interest.

When you record the repayment it should be recorded this way

eg repayment $2500 interest component $250

DR 2-XXXXLoan account  2500 N-T

CR 2-XXXX unexpired interest            250 N-T

DR 6-XXXX interest expense account  250 FRE

If you dont have the amortisation schedule a journal can be done at the end of the year by your accountant

Hope that helps

Lisa

Hope that helps

Lisa

[ronatbas]

Hi Ash

Hi Ash

You need to be very clear on the finance you are using. A personal loan or similar does not have GST, a hire purchase arrangement does have GST, which I believe is now claimable at the start of the agreement. With hire purchase the vehicle remains the property of the financier and does not appear on the company accounts until such time that the HP is paid out.

These days HP is rarely used and loan is the most likely arrangement. In this case the car vendors bill is written as

1-xxxx Motor Vehicle at Cost                       $64741                 CAP

1-xxxx Motor Vehicle at Cost                       Remainder          NT

The loan needs to be setup as Credit Card type and is populated by using Pay Bills to pay the bill.

It is unaffected by the GST registration of the company.

I recently answered a similar query and you might find the notes below useful

Changes to Chart of Accounts

1-xx00 (Motor Vehicle) at Cost

1-xx05 depreciation on (motor vehicle)

2- xx00 ABC loan (setup as Credit Card type)

2- xx05 ABC loan interest (setup as Credit Card type)

2 -0007 ABC loan balloon (setup as Credit Card type)

8- xxxx Sale of Asset(MV)

I assume that you already have a Cash drawer and a Directors loan Account

Use Receive Money to Cash Drawer for Sale of old Vehicle 15000 Account 8-xxxx Tax CAP

Setup purchase Invoice for entire cost of Vehicle inc. registration, dealer fees and charges.

Line 1 should read

Vehicle details inc.  Reg #, VIN. Account 1-xx00 MV at Cost            $64741  Tax CAP

Line 2

Vehicle                                                                                                                 Difference  Tax N-T

https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Motor-vehicle-and-transport/GST-and-moto...

Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of that limit. For 2022–23, the maximum GST credit you can claim is $5,885 (that is, 1/11 × $64,741). This limit also applies to cars which are fuel efficient.

Pay invoice in three steps

From Directors loan or Bank        $500

From Cash drawer                           $15000

From Loan Account                         Balance

We then need to set up the loan account.

Spend money from Loan Account to Interest on Loan $17K

Assuming that there is no GST on the Loan charges spend money from Loan Account to Bank charges $1301 FRE. If there is identifiable GST charge to Merchant Fees

Calculate the loan amount over $48K and use Spend Money to 2-0007 Balloon.

Monthly payments should be made Bank to Loan and the accountant can do an end of year adjustment to move some of the payment to Interest payable.

[AshMyob]

Thank you @ronatbas.

Very helpful.

Ash 

[AshMyob]

Hello @LRBooks61 

If i am doing a spend money lets say from cheque a/c $1,000 per month 

Spend money - 

Liability ac A/C code 2 - 1000

Unexpired interest A/C code 2 = (150)

Interest A/C - a/c code 6 = 150 

Is that correct?

Thank you again

Ash 

[LRBooks61]

Hi Ash 

yes that is perfect 

Lisa

[huong2411]

Hello all,

I have read thru most of the thread but I can't determine which entries to setup my new car purchased in August 2022 in MYOB.

Here's the details of the car purchase:

Toyota Hiace 2022 GDH300R Van 5dr, LWB SA 6sp 2.8DT $40,854.64
Commercial Heavy Duty Roof Racks - 3 bar set $772.34
Technician Step (Step only) $882.30
Customer Fee $590.91
Total Price (Before GST) $43,100.19
GST Payable $4,310.02
CTP (See CTP Policy for GST) $746.79
Plate Issue $115.00
Registration $824.00
Stamp Duty $1,404.00
Total Sales $50,500.00
Total GST $4,310.02

The car is under finance with Wespac with the contract as below:

Loan amount: $50,950

Total interest charges payable: $9311.60

Repayment amount: 1004.36

Number of repayments: 60

Payment period: Monthly

Establishment fee: $450

Could someone help me create associated accounts in chart of account so that I can create correct entries in General Journal in MYOB and I could claim GST (GST Payable $4,310.02) on my new car for last quarter BAS and on going repayment recorded by matching in the monthly direct debit bank feed transaction.

Much appreciated your detailed response

Thanks,

Harry

[David65]

Hi - We purchased a vehicle for $43,900 - Finance adds $10485.03 in interest over 60 months with a balloon of $13,169.83.  Repayment is $686.92 pm.

Total Loan is $54,385.03

I have recorded purchase of vehicle and payment made by loan account however where do I record the $10485.03 in order to balance the GJ entry?

Thanks