Fixed assets purchased on hire purchased on hire purchase terms are recorded at ?

Assets recorded in books on Cost Price in assets.

The Answer B

Agree with all answer

B) Cash value

it is b

B) cash value

ANSWER B 

B) Cash Value I think so.

B is answer 

Good answer from vinod jetley 

There are two methods of accounting in the books of Hire-purchaser. Their detailed description is as under:- Asset Accrual Method: Under this method it is considered that the hire-purchaser is the owner of the asset up to the value of the cash price paid by him in the from of down payment or the cash price paid included in various instalments. The following journal entries are recorded under this method. (i)On taking the delivery of asset: No entry is recorded. (ii)On making the down payment (if any) Asset A/c Dr. (Amount of down payment) To Cash/Bank A/c. (iii)On becoming the instalment due Asset a/c. Dr (Balancing figure) Intt. A/c. Dr. (Amt. of Intt.) To Hire-Vendor A/c. (Amt. of Instalment) (iv)On payment of instalment: Hire-Vendor A/c Dr. (Amt. of Instalment) To Cash/Bank A/c. (v)On charging the Depreciation: Depreciation A/c Dr. (Amt. of Depreciation) To Asset A/c. (vi)On Transfer of interest and depreciation to P/L A/c: P/L A/c. (Total amt.) To Interest A/c (Bal. of Intt. A/c.) To Depreciation A/c. (Bal. of Dep. A/c.) Under Total Assets Value Method: Under this method of accounting in the books of hire-purchaser, is done on the assumption that the ownership of the asset is also transferred to the purchaser with the delivery of goods. The following journal entries are recorded under this method. (i)On taking the delivery of assets at the time of agreement: Asset A/c Dr. (Cash price of Asset) To Hire vendor A/c. (ii)On making the down-payment (if any): Hire-Vendor....... A/c. Dr. (Amount of down payment) To Cash/Bank A/c (iii)On becoming the instalment due: Interest A/c. Dr. (Amount of interest) To Hire-Vendor A/c (iv)On payment of instalment: Hire-Vendor a/c Dr. (Amount of instalment) To Cash/Bank A/c (v)On charging the depreciations: Depreciation A/c. Dr. (Amount of depreciation) To Asset A/c. (vi)On Transfer of interest and depreciation to P/L A/c: P/L A/c. Dr. (Total) To Interest A/c. (Bal. of Intt. A/c.) To Depreciation A/c. (Bal. of Dep. A/c.) Posting in Ledger Accounts: After passing journal entries under any of the methods discussed above, the following ledger accounts are opened in the ledger and the postings are made accordingly. (i) Asset A/c. (e.g. Trucks A/c, Machinery A/c. etc.) (ii) Vendor's A/c. (iii) Interest A/c. (iv) Depreciation A/c. Note: Before recording the entries the amounts of interest and depreciation will be calculated in two separate tables showing the calculations of interest and depreciation. Calculation of Interest The total payment made under hire-purchase system is more than cash price. In fact, this excess of payment over the cash price is interest. It is very essential to calculate interest because the amount paid for interest is charged to revenue and the asset is capitalized at cash price. Thus normally all instalments will include a part of cash price and a part of interest on the outstanding balance. However the amount paid at the time of agreement (down payment) will not include any interest. The calculation of interest is made under two conditions: (a) When interest is included in amount of instalment: Where the hire-purchase price i.e. payment made in the form of down payment and all instalments is more than the cash price, it is regarded that the interest is included in instalments