Institute of Certified Bookkeepers
First Previous - Page 1 of 1 - Next Last

February 2015 Question of the Month

  • 83 posts
  • # 105593

This month's question for you all to debate at your network meeting is:

Your client has set up a new company and intends to close down the old entity and continue trading from the new entity. He obtained advice from a solicitor and accountant on how to treat the company owned vehicles. He didn’t like the advice so has followed his own advice. He traded in the vehicles and bought new ones, all from the new company’s name and bank account.

What does this mean for ownership of the vehicles and the asset register?

Which company’s BAS would you recommend showing the sale/trading of the cars, or would you leave both BAS for the accountant to complete?

  • 127 posts
  • # 106010

You will need to provide information to the client about asset ownership to show him that if the asset was bought from the old entity, the trade-in value should be applied to that entity.

Any vehicles on the asset register will have to have disposal value shown and accounted for. However, perhaps the client did in fact let the accountant know what he chose to do with the vehicles and the accountant has instructed him to transfer ownership of the vehicles prior to the trade-in. In this case, you will need to see the documentation supporting this. Otherwise, the new entity will owe the old entity the value of the trade-in and GST value of the vehicles will have to be reported accordingly on the next BAS.

This is a good example of when you would want to let the accountant know as much as you can tell him about this situation…and then let him deal with it or follow his instructions.

A reminder also that as a BAS agent you must take reasonable steps to ensure the accuracy of the BAS and you must not lodge a BAS you know or suspect is false or misleading.

First Previous - Page 1 of 1 - Next Last
loading