Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
Auto Dealerships - Audit Technique Guide - Uncle Fed's Tax*Board
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Step # 3<br />
For each item category, add together the base vehicle costs.<br />
Item Category - Model 9100A, LS400, 4DR Sedan<br />
Stock #<br />
Base Vehicle Cost<br />
45810 $30,400<br />
45822 30,400<br />
45853 30,400<br />
Total Base Vehicle Cost $91,200<br />
Item Category - Model 9010A, ES250, 4DR Sedan<br />
Stock #<br />
Base Vehicle Cost<br />
45820 $17,466<br />
45854 18,081<br />
Total Base Vehicle Cost $35,547<br />
Step # 4<br />
Compute an average base vehicle cost for each item category.<br />
Item Category - Model 9100A, LS400, 4DR Sedan<br />
$91,200 divided by 3 vehicles = $30,400<br />
Item Category - Model 9010A, ES250, 4DR Sedan<br />
$35,547 divided by 2 vehicles = $17,773.50<br />
Step # 5<br />
Compute the total current year base vehicle cost.<br />
Item Category<br />
Total<br />
9100A, LS400 4DR Sedan $ 91,200<br />
9010A, ES250 4DR Sedan 35,547<br />
Total Current-Year Base Vehicle Cost of the Pool $126,747<br />
Step # 6<br />
Compute the total base vehicle cost of the ending inventory at the prior year’s base vehicle cost.<br />
By performing the same steps, number 1, 2, 3, and 4 above for the preceding year’s ending<br />
inventory, you would obtain the preceding year’s average base vehicle cost. In this example, we<br />
9-6
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