How do we enter a vehicle purchase that`s financed ?
I use a journal - it’s a little complicated I am happy to talk you through it over the phone but not today, tomorrow I’m free
0415 940 843
Hi @instint
Consider providing as example figure/amount for the vehicle, along with any other related info that could better guide the suggested method of recording such as the finance arrangement as the accounting workflow is informed by the legal structure of the arrangement.
Example:
"We purchased a new vehicle on 1 July 2026 for $66,000 including GST.
We paid a $16,000 deposit from our business bank account and financed the remaining $50,000 through a 5-year chattel mortgage.
The monthly repayment is $980, consisting of approximately $750 principal and $230 interest.
Our accountant has advised that the vehicle should be depreciated at 20% reducing value per year.
What is the best way to record:**
I'm looking for the recommended account setup and journal entries in Reckon Accounts Desktop, as well as any reports I should use to reconcile the vehicle asset, accumulated depreciation and loan balance."
@instint
I create a Fixed Asset Item which I enter on a Bill, then use a GJ to "pay" this bill & create the finance opening balance, at the same time.
If you still need assistance with this, I have a guide I've written up on it so feel free to email me direct, if you'd like me to send it through to you 😊
We purchased a used vehicle on 6/7/26.
The purchase was fully financed under a Chattel mortgage agreement.
The cost for the vehicle was $40950 including gst.
Total financed was $53965.80 over 60 installments
The initial payment was 1499.43 & subsequent payments will be $899.43
I’ve replied on your original post 😁
That's a more detailed example which should allow for a better worked example answer.
Have you consulted with your accountant about how they would want the chattel mortgage split between vehicle cost, GST claimable, loan principal, interest, and any balloon/residual payment?
The info provided to you by @Acctd4 may be a better option than the example below.
It is important to get your accountants advice on the preferred accounting treatment, but in Reckon Accounts Hosted one possible way to handle it is:
Confidence: Moderate (because GST and loan component allocations should be confirmed with the accountant and finance documentation).
Based on the figures supplied:
The financed amount exceeds the vehicle purchase price, which suggests the finance contract includes:
Because of this, you would generally not record the full $53,965.80 as the vehicle value.The vehicle should normally be capitalised at its purchase price, while the difference between the purchase price and total repayments is recognised as finance costs over the life of the loan.
Balance Sheet Accounts
Profit & Loss Accounts
Enter a Journal (or Bill if preferred) dated 06/07/2026:
Account
Debit
Credit
Motor Vehicle Asset
40,950.00
Chattel Mortgage Liability
This records:
Many businesses on a chattel mortgage claim the GST on the purchase upfront.
If the vehicle cost is $40,950 GST inclusive:
Some accountants prefer:
37,227.27
GST Paid
3,722.73
However, GST treatment can vary depending on:
This should be confirmed with the accountant.
Do not code the whole payment to Motor Vehicle Expense.
Each repayment is usually split:
For an $899.43 repayment:
650.00
Interest Expense
249.43
Bank Account
899.43
The actual principal and interest amounts must come from the financier's amortisation schedule.
As the loan progresses:
The first payment of $1,499.43 should also be split according to the finance schedule.
Example structure:
XXX
1,499.43
Use the lender's payout or repayment schedule for the exact split.
There is a significant difference between:
Difference:
$13,015.80
This amount is likely made up of:
Normally this amount is not added to the vehicle asset account.
Many chattel mortgages include a:
If a balloon exists, the accounting entries change because part of the liability remains payable at the end of the term.The finance agreement should be checked.
Reckon can:
Reckon does not determine:
These come from:
After entering the transaction, run:
Confirm:
Review:
Check:
The most important document is the lender's repayment/amortisation schedule, showing:
Without this schedule the repayments cannot be allocated accurately.
For a typical chattel mortgage in Reckon Accounts Hosted:
The key document needed for exact entries is the finance company's repayment/amortisation schedule, particularly to determine the principal, interest, and any balloon component of the loan.
