285 – Company Vehicles

Fixed Assets

Synopsis

Account 285

Remarks:

The balance in this account represents the cost of all vehicles acquired by the retailer for use in the operation of the automobile business.

This account should include such vehicles as: service and parts trucks, wreckers, motorcycles, courtesy cars (excluding vehicles which are primarily revenue producing, such as daily rental vehicles to service customers – even if an occasional customer is charged a nominal amount, with no contractual obligations, this should not be considered as primarily revenue producing), and airplanes (used in the retailer's regular activities).

This account should not include vehicles assigned as demonstrators.

This account should be supported by a subsidiary record.  Company cars and service vehicles should be physically inventoried periodically, and stringent controls placed on their use.

All company cars and service vehicles acquired or transferred from another vehicle inventory should be listed in detail on a fixed asset inventory and depreciation record.  The accumulated total in the cost column should agree with the balance in this account each month-end.

The costs of licenses, insurance, interest, and ordinary maintenance should be charged to the applicable expense accounts.

When a company vehicle included in this account is sold, the total cost should be credited to this account, and the reciprocal accumulated depreciation account relieved.  Any gain on the sale should be credited to Additions to Income – Other (Account 805).  Any loss on the sale should be debited to Deductions to Income – Other (Account 855).

Note: