Scrap car then salvage accounting

[freeflowinfo]

Hi, i got a strange one re how to deal with where to account for a car. If we buy a scrap car for scrap and then decide to salvage it instead, repair it and then put it up for sale, how and where would I put it in the books?

 

[DWS]

Hi, i got a strange one re how to deal with where to account for a car. If we buy a scrap car for scrap and then decide to salvage it instead, repair it and then put it up for sale, how and where would I put it in the books?

Who is ‘we’?
Treat it as anything else you would buy for resale
Sales price minus cost and parts leaves profit

 

[freeflowinfo]

We is a figure of speech and not important, I thought the same but as it is a first scrap the possibility of becoming a car I was not sure, in the end, the profit will be the scrap price cost, then the sale price minus all the expenses to put it back to original state as a car.

 

[MyAccountantOnline]

Hi, i got a strange one re how to deal with where to account for a car. If we buy a scrap car for scrap and then decide to salvage it instead, repair it and then put it up for sale, how and where would I put it in the books?

Is this for a sole trade, partnersip or limited company and what capital allowances have been claimed if any on the car?

 

[freeflowinfo]

Is this for a sole trade, partnersip or limited company and what capital allowances have been claimed if any on the car?

Hi, it is a sole trader, the car at the moment is scrap and not usable so no capital allowance has been claimed, it is possibly going to be repaired to be sold for profit, but at the moment only scrap is being bought.

 

[DWS]

Is this for a sole trade, partnersip or limited company and what capital allowances have been claimed if any on the car?

I would imagine none if it was only bought for scrap

 

[MyAccountantOnline]

Hi, it is a sole trader, the car at the moment is scrap and not usable so no capital allowance has been claimed, it is possibly going to be repaired to be sold for profit, but at the moment only scrap is being bought.

In that case as it's something you are buying with a view to making a profit on to resell I'd show the cost as a direct cost together with the cost of any parts etc you are buying to repair it and the sale proceeds as sales.

Dont forget to account for it as stock at your year end if it's not sold at the end of your financial year unless you use the cash basis.