We now want to sell it, but it has been expensed from 2012 to 2014.
Just discovered coded vehicle as a lease when it should have been a purchase from 2012 how should this be corrected?
Answers
Hmmm. . How did you record the use of cash when you acquired the truck?
Cash was debited, vehicle expense was credited. Initially it was to be leased, then the owner changed it to a purchase, but the records were not updated to reflect the change.
So how did you book the cash when you changed from lease to purchase?
The records were not changed when the title was received so right now there is no asset on the books to sell.
There is something that doesn't sound just right. If you bought a car for $20K and put $3K down and make monthly payments of $300, you should have had an asset on the books for at least $17K.
So you didn't capitalize the lease and put the $3K and payment to auto lease, I understand that. But when you purchased the car and paid $19K for example, what entry was made? $19K went out of your bank account - how did you book the entry?
If you expensed the $19K, then you may be keeping your books on the tax basis. I would talk with your tax preparer, because whatever you got for the vehicle is now 100% income.