Vehicle Depreciation Entry
(St Catharines, ON)
How to Record Vehicle Expenses
Let's say I calculated the 30% depreciation on my vehicle (3rd year), which equals $5,000.
My business portion of the vehicle is 80%.
Do I enter the full $5,000 in the books (Depreciation Expense + Accumulated Depreciation) or $4,000 (80% x $5000).
I know on the tax form, only $4,000 will be allowed, but I forget which way to do it on the company books.
What I do is enter the vehicle expenses at 100%. I have a sub-account called "Personal Use Adjustment". I book the personal use compenent, 20% in your case, there so that only the 80% business portion is now reflected in the bottom line.
One reason I do it this way is to make data entry to the T2125 form easier as it requires expenses to be entered at 100% and the tax software backs out the personal portion. It also makes it easier in an audit to match the receipt to the expense booked.
Hope that helps Kyle.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.