Basic Estimate Help
- You will be prompted to enter the estimated year ending inventory totals at actual cost*. These totals should be split out by manufacturing lines. If using the two pool method, you will also be asked to split out by Pools – “New Cars Inc. Demos” and “New Trucks Inc Demos”.
- You will be prompted to enter the "% of prior year models in year ending inventory". The prior year model should be determined by subtracting one model year from the current model year. For example, if your dealership is currently stocking in 2016 models, the "prior year models" would be the 2015 models. The percentage is determined by the Prior Year models ($'s) divided by the total inventory ($'s). This will give you a decimal number; to determine the percentage, multiply that number by 100. If using the two pool method, you will need to enter these percentages split out by Pools.
- Example: You have 25 "2015 model year" trucks equaling $450,000 actual cost and 200 total trucks equaling $3,600,000 actual cost. To determine the percentage, you would perform the following steps:
- $450,000 / $3,600,000 = .125
- .125 x 100 = 12.5%
- Therefore, 12.5% of your New Truck inventory is made up of prior model year unit
- You will be prompted to enter the estimated year ending inventory total at actual cost* only. If using the two pool method you will be asked to split this total into Used Cars and Used Trucks.
Helpful hints regarding inventory totals at actual cost:
Inventory totals may include:
- dealer cost of the car
- dealer added accessories
- advertising cost
- other inventory expenses
Inventory totals should NOT include:
- write downs
- any applicable “Dealer Discounts” that your dealership elected to “net” from inventory (trade discounts, etc.) for tax purposes*
*- Please note: If your dealership elected to net “Dealer Discounts” for tax purposes, the estimated inventory values should exclude these discounts. If the dealership is still participating in the same manufacturer programs as the prior year, and the mix of inventory can be deemed similar to the prior year, you may opt to determine your estimated Dealer Discount value by applying last year’s actual % of discounts to this year’s estimated inventory total. If SourceHOV | Tax determines your annual discount amounts, refer to your LIFO reports from the prior year to see the lookup totals that were netted from the year ending inventory totals; it is from this that you can determine what last year’s % of inventory dollars were dealer discounts and thereby netted from the final inventory dollars.