Vehicle Delivery Preparation Expense
Recording the cost of preparing a new vehicle for customer delivery (PDI — Pre-Delivery Inspection).
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| New Vehicle Inventory (PDI Cost) | Asset (+) | 350.00 | - |
| Internal Labor / Parts (PDI Transfer) | Expense (-) | - | 350.00 |
💡 Accountant's Note
Pre-Delivery Inspection (PDI) involves cleaning, fueling, activating features, and inspecting each new vehicle before customer delivery. PDI costs (labor, fuel, accessories installed at delivery) are capitalised into vehicle inventory cost, reducing the gross profit by the PDI cost when the vehicle is sold. Some manufacturers reimburse dealers for PDI through dealer preparation allowances.
Practitioner & Systems Framework
💻 ERP Architecture
PDI is performed as an internal work order (IWO) in the DMS service department. The labor and materials are charged to the new vehicle inventory record at cost (not retail). The PDI IWO is automatically generated when a new vehicle is received from the manufacturer and cleared when the vehicle is delivered to the customer. Manufacturer PDI allowances (reimbursements for dealer preparation) reduce the effective PDI cost in the vehicle's cost record. The PDI cost is a required component of new vehicle unit economics analysis.
⚠️ Audit Flags
Auditors test PDI costs capitalized into vehicle inventory against the IWO records. Confirm that manufacturer PDI allowances are correctly offset against the PDI cost in the vehicle record. Test that PDI cost is included in the cost of goods sold when the vehicle is retailed. Review whether any accessories installed at delivery (floor mats, window tint, protection film) are being correctly capitalised into the vehicle cost or separately invoiced to the customer.
📄 Required Documentation
PDI internal work orders by VIN, PDI labor and materials cost, manufacturer PDI allowance program terms and credits, new vehicle inventory cost record per VIN showing PDI, installed accessories tracking, and PDI allowance reconciliation to manufacturer statement.
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