Fixed Assset part exchange

Trish

A client has just part exchanged a vehicle for another second hand vehicle. Payment was 1 the part exchange value and 2 the balance paid in cash. I am not sure what the accounting entries should be, can anyone help. I have got as far as:

Credit cash a/c with the balance paid in cash
Debit motor vehicles a/c with the same amount
Debit motor vehicles a/c with the part exchange amount
but then I get stuck - what a/c do I credit with the part exchange value, is it the motor vehicle a/c? I would really appreciate some help with this

Regards Trish

Anne Boleyn

Fixed asset

Hi

I would remove the old vehicle from the balance sheet first taking any profit or loss to the p&l and then deal with the new purchase.

wildgoose1uk

message deleted

PGM

Anne Boleyn wrote: »

Hi

I would remove the old vehicle from the balance sheet first taking any profit or loss to the p&l and then deal with the new purchase.

Agreed, deal with it as two seperate transactions.

Raging Pineapples

I'd do it like this:

(negatives = credits, because I hate trying to line things up on this forum)

Numbers assumed:

Old Vehicle
Cost: £3,000
Acc. Depn: £1,734
NBV: £1,266
Part Exchanged for: £1,000
So loss on disposal of: £266

New Vehicle
Cost: £4,000
Part ex from old van: £1,000
Balance paid: £3,000


Wipe out old van
(3,000) Motor Vehicles - Remove capital cost
1,734 Motor Depn. - Remove acc. depn.
1,000 Motor Vehicles - Part ex. proportion of value of new van
266 Disposals - The loss on the valuation (swap if it's a profit)

Put in new van
3,000 Motor Vehicles - Balancing amount paid
(3,000) Bank - Actual payment


That's how I'd do it anyway.

Trish

Fixed Asset part exchange

Thanks for your reply Chris, what you suggested worked a treat.

Regards Trish

Trish

Thanks for your help Chris, what you suggested worked a treat.

Many thanks Trish