231A - New Vehicles

231A - New Vehicles - Subaru

Current Assets

New Vehicles

Synopsis

Account 231A

Debits

Credits

The distributor cost of all new Subaru vehicles including accessories and options (factory installed), inspections and port services, and other related charges.
The internal cost of equipment and accessories installed at the retailer including installation labor.

Inventory value of all new Subaru vehicles sold, transferred to other dealers, placed in demonstrator service or company service or otherwise disposed of.
Internal cost of accessories removed from new Subaru vehicles.

Remarks:

New vehicles should be recorded in the new vehicle purchase journal upon the receipt into inventory and also on the subsidiary new vehicle inventory record.

New vehicles placed in retailer service (demonstrator, lease, driver education, etc.) should be transferred by general journal entry to the appropriate inventory account. The vehicle inventory record should be removed from the respective new vehicle inventory and updated with sufficient information reflecting the inventory transfer.

Proper procedure should be established to assure that all equipment or accessories added to a new vehicle or removed from a new vehicle are properly recorded on the new vehicle inventory record.

Any differences between the physical inventory and the book inventory should be resolved prior to the month-end closing.

Dealers using the LIFO method of accounting should refer to Reserve for LIFO – New Vehicles (Account 232).

Holdback included in the factory invoice total should not be included in the inventory value of new vehicles. This amount should be deducted from the vehicle invoice total and debited to Holdback Receivables – Subaru (Account 218).

In all instances where new vehicles are purchased from, sold to, or traded with other dealers, they are considered TRANSFERS and should, therefore, be recorded in the new vehicle purchase journal, not in the vehicle sales journal.

When new vehicles are transferred between dealers and the holdback is included in the price of the new vehicles being transferred, the procedure is as follows:

New vehicles sold to another dealer – holdback received from the dealer purchasing the new vehicle should be credited to the Cost of Sales account for that model.
New vehicles purchased from another dealer – holdback paid to the dealer selling the new vehicle should be debited to the Cost of Sales account for that model.
New vehicles traded between dealers – holdback applicable to new vehicles traded between dealers should be handled as outlined in Items 1 and 2 above.

Note: