Part Exchange

System

Help, I'm a bit stuck and don't have my study notes with me.

How do you account for a part exchange.

I know the following:
Cr Fixed Asset Cost with original value
Dr Disposals with original value

Dr Fixed Asset: Accumulated Depreciation
Cr Disposals

Then what do I do? Can't believe I can't remember something so simple... and with just over a week to go too!

Thanks
Kelly

System

Re:Part Exchange

Next step is:

Cr Disposals - P/E value
Dr Sundry Creditors (or whatever a/c you're using for the vendor) - P/E value

Balance the disposals account - the balancing figure is the loss (if Cr) or profit (if Dr) that goes to the P&L account.

Then just add the new asset as normal

Dr Fixed Asset: Cost - Full cost of new asset
Cr Sundry Creds (or whatever) - Full cost of new asset

And then when the invoice is paid

Cr Bank - what you actually paid the vendor
Dr Sundry Creds - what you actually paid the vendor

Hope this helps,

Chris

System

Re:Part Exchange

Thanks for your help Chris, I've managed to get there in the end.