264 – SSLP/Lease/Rental Vehicles

Current Assets

Other

Synopsis

Account 264

Debits

Credits

  1. The cost of all vehicles placed in long term SSLP, lease or rental service.

  2. The cost of dealer installed optional equipment and accessories (including labor).

  3. The accumulated program allowances earned on each vehicle transferred or removed from SSLP, lease or rental service.

  1. The total cost of vehicles when removed SSLP, lease or rental service.

  2. Any factory/distributor program allowances paid to offset depreciation costs.

 

 

Remarks:

The use of this account is intended for those retailers engaged in leasing or renting vehicles on a supplemental basis and for the Subaru SSLP program.

 

Income derived from the SSLP program should be credited to Account 811 – Subaru SSLP Income and expenses related to SSLP vehicles should be debited to Account 860 – Subaru SSLP Expense.

 

Retailers engaged in Lease & Rental activity on a large scale should consider establishing a separate business, with an accounting system designed specifically for that type of business.

 

Regardless of the number of units placed in lease/rental service, it is recommended that legal, accounting, and tax advice be obtained.

 

Vehicles purchased for lease or rental should be placed in the appropriate New Vehicle Inventory (in the normal manner) until they are fully prepared for delivery/service.  Then a general journal entry should be made to transfer the unit from New Vehicle Inventory to this account.

 

Rates of depreciation vary according to the type of vehicle, and the provisions of the lease/rental agreement.  It is recommended that the dealer obtain legal, accounting, and tax counsel for proper compliance with various legal and tax regulations.

 

Depreciation credits should be charged to Account 268 – Accumulated Depreciation – Lease and Rental Vehicles.  The offsetting debit for depreciation expense should be made to Subaru SSLP Expense – Account 860.

 

The offsetting debit for eligible program allowances should be to Factory Receivables -Other (Account 221), or Factory Receivables – Subaru (Account 227).

 

At the time a lease/rental vehicle is removed from lease/rental service and transferred to used vehicle inventory, any resulting gains or losses resulting in the difference between book value and appraised value should be charged to either Subaru SSLP Income, Account 811, or Subaru SSLP Expenses – Account 860.

 

 

 

Note: