Assets & depreciation · Level: Basics
Journal entry: Buying a company vehicle
A delivery van is a fixed asset: the net amount goes to Vehicles and input VAT is reclaimed.
Worked example
We buy a delivery van for £25,500.00 plus 20% VAT and pay by bank transfer.
Correct journal entry
Vehicles £25,500.00, Input VAT £5,100.00 / Bank £30,600.00
Debit
Vehicles£25,500.00
Input VAT£5,100.00
Credit
Bank£30,600.00
Why?
- Vehicles: asset increases → debit
- Input VAT: asset increases → debit
- Bank: asset decreases → credit
Calculation
- VAT: 20% of £25,500.00 = £5,100.00
- Gross amount: £25,500.00 + £5,100.00 = £30,600.00
Typical mistake
Recording the asset at the gross amount.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
We buy a delivery van for £40,500.00 plus 20% VAT and pay by bank transfer.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for buying a company vehicle?
Example: Vehicles £25,500.00, Input VAT £5,100.00 / Bank £30,600.00.
How do I recognise this case?
A delivery van is a fixed asset: the net amount goes to Vehicles and input VAT is reclaimed.
What is the typical mistake?
Recording the asset at the gross amount.