How to do accounting operations for car purchases

Accounting for car purchases and depreciation for cars is known to be a difficult task for accountants, especially newly graduated accountants. The article below will help accountants answer questions about how to account for car purchases and provide documents and accounting operations that need to be grasped and depreciation for specific cases.

1. Set of documents when accounting for car purchases

The complete application set will include the following necessary documents:

  • VAT value invoice is a true copy of the original, the original is kept by the Police;
  • Asset purchase and sale and liquidation contracts;
  • Minutes of property handover and receipt fully signed by all parties;
  • Fee receipt: registration fee, license plate registration fee, inspection fee, road fee, insurance… (if any);
  • Non-cash payment documents (required): Payment order, bank Debit note.

2. Accounting entries

Pursuant to Point a, Clause 1, Article 4, Circular 45/2013/TT-BTC stipulates: “The original price of tangible fixed assets purchased (including new and used purchases): is the actual purchase price to be paid plus ( +) taxes (excluding refundable taxes), directly related expenses that must be paid up to the time the fixed assets are put into a ready-to-use state such as: loan interest incurred in the process of investing and purchasing fixed assets; shipping and handling costs; upgrade costs; installation and test running costs; Registration fees and other directly related costs.”

That means registration fees, registration and inspection fees will be accounted for in the original price of the car. Accounting entries for car purchases include:

  •  Accounting for car purchases
  •  Accounting and payment of car registration fees
  •  Accounting for fees and other charges
  •  Car insurance accounting (1 year from the date of insurance contract)
  •  Accounting for taxes

What is included in the set of documents when accounting for car purchases?

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3. How to account for buying cars under 1.6 billion and cars over 1.6 billion

Because it is not a special case, accounting for car purchases under 1.6 billion is easy for accountants. As for special cases – cars over 1.6 billion, based on the regulations in Circular 219/2013/TT-BTC, Circular 151/2014/TT-BTC, Circular 78/2014/TT-BTC and Circular 96/2015/TT-BTC:

Fixed assets are passenger cars with 9 seats or less (except for cars used in the business of transporting goods, passengers, tourism, and hotels) with a value exceeding 1.6 billion VND (price without VAT), the input VAT amount corresponding to the value exceeding 1.6 billion VND is not deductible.

Depreciation of fixed assets corresponding to the original price exceeding 1.6 billion VND/vehicle for passenger cars with 9 seats or less (except for cars specializing in passenger transport, tourism and hotel business) … is a non-deductible expense when calculating corporate income tax.


According to the above regulations, for businesses that use cars for business to transport passengers, goods, provide tourism services, model and test drive (automotive businesses), the tax will be fully deductible.

It is necessary to firmly grasp the conditions for determining whether it is a tangible fixed asset and how to determine the original price of the fixed asset to accurately calculate the value of the car before proceeding with accounting in the books.

Because it is a difficult case to handle accounting for car purchases and depreciation, accountants need to pay special attention and learn more about how to deduct and record depreciation for cars over 1.6 billion. Basically, cars with a purchase price of more than 1.6 billion are still fixed assets and are still accounted for similarly to cars with a value of less than 1.6 billion.

How to account for buying a car worth more than 1.6 billion VND?

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Buying fixed assets in general and buying cars in particular are relatively complicated accounting operations. However, fixed assets are an important part of an enterprise’s asset system and often have a very large value, requiring accountants to record them accurately.

Smart Solutions For Business Company Limited (S4B Vietnam) supports detailed, complete and accurate calculations of the original price of fixed assets, completely meeting the recording requirements for all arising operations related to fixed assets and related reporting books. We invite businesses and accountants to contact us for more details:

Smart Solutions For Business Company Limited (S4B Vietnam)

  • Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
  • Tel: + 84 24 3974 4181
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