How do you record the sales tax on the purchase of an asset?
Accountants define the cost of an asset as all of the costs that are necessary to obtain the asset and to get it ready for use.
If your state does not allow an exemption from sales tax for the asset you purchased, the sales tax should be recorded as part of the cost of the asset.
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8 Responses to “How do you record the sales tax on the purchase of an asset?”
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thank you verey much
thanks alot
it is better to give the explanation abt depreciation, if we take the sales tax as input.
well…i have check many books which are applying sales tax after the discount..
example: this is the outlay..
List price xxx
less: trade discount (rate if any) xxx
invoice cost xxx
less: cash discount (rate if any) xxx
cash price xxx
add: sales tax (on cashprice) xxx
net cash price xxx
add other expenses (if any) xxx
total cost xxx
the sales tax is applied on cash price…
so is it right or not and ya but meigs and meigs a famous accounting book says that sales tax is applied or taken out (if rate given) on list price…
which is the right method to calculate sales tax?? !!
after discount or before discount? !!
which is the right method to calculate sales tax?? !!
i mean on list price or on cash price?? !!
Only those taxes should be added to cost that are non-refundable, if sales tax is in the nature of refund/adjustment it shouldn’t be capitalised.
i think cash price is the correct method