Vehicle Trade-in

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Subject Author Date Vehicle Trade-in Kevin 02-15-2009  Re: Vehicle Trade-in Haskel LaPort 02-15-2009  Re: Vehicle Trade-in Kevin 02-16-2009  Re: Vehicle Trade-in San Diego CPA 02-26-2009  Re: Vehicle Trade-in Haskel LaPort 02-26-2009  Re: Vehicle Trade-in Golden California Girls 02-26-2009  Re: Vehicle Trade-in Haskel LaPort 02-26-2009  Re: Vehicle Trade-in dpb 02-26-2009  Re: Vehicle Trade-in Golden California Girls 02-26-2009  Re: Vehicle Trade-in Haskel LaPort 02-26-2009  Re: Vehicle Trade-in Golden California Girls 02-27-2009  Re: Vehicle Trade-in San Diego CPA 03-01-2009  Re: Vehicle Trade-in Haskel LaPort 03-01-2009  Re: Vehicle Trade-in Haskel LaPort 03-01-2009
Posted by Kevin on February 15, 2009, 12:08 pm Please log in for more thread options I purchased a new vehicle and traded in my old one. Figures are as follows Old truck cost: $13500 Trade in on old truck: $5000 Accum Dep. on old truck: $8000 New truck cost: $18600 Note Payable: $13600 Would this be the correct way to account for the sale of an asset and the purchase of the new asset with trade in? General Journal entry Account: Debit: Credit: Fixed Asset Acct. (old truck) $13500 Fixed Asset Dep. Acct. $8000 New Vehicle Asset Acct. $5000 Asset Sale Proceeds (income acct) $500 Loan Holder $13600 New Vehicle Fixed Asset Acct. $18600 Posted by Haskel LaPort on February 15, 2009, 10:42 pm Please log in for more thread options No, trade-ins are not treated like a sale. The trade-in value means nothing and should not be a factor in recording the transaction. >I purchased a new vehicle and traded in my old one. Figures are as follows > > Old truck cost: $13500 > Trade in on old truck: $5000 > Accum Dep. on old truck: $8000 > > New truck cost: $18600 > Note Payable: $13600 > > Would this be the correct way to account for the sale of an asset and the > purchase of the new asset with trade in? > > General Journal entry > > Account: Debit: Credit: > Fixed Asset Acct. (old truck) > $13500 > Fixed Asset Dep. Acct. $8000 > New Vehicle Asset Acct. $5000 > Asset Sale Proceeds (income acct) $500 > > Loan Holder $13600 > New Vehicle Fixed Asset Acct. $18600 > Posted by Kevin on February 16, 2009, 8:43 pm Please log in for more thread options So what would the GJ entry look like? > No, trade-ins are not treated like a sale. The trade-in value means > nothing and should not be a factor in recording the transaction. > > >>I purchased a new vehicle and traded in my old one. Figures are as follows >> >> Old truck cost: $13500 >> Trade in on old truck: $5000 >> Accum Dep. on old truck: $8000 >> >> New truck cost: $18600 >> Note Payable: $13600 >> >> Would this be the correct way to account for the sale of an asset and the >> purchase of the new asset with trade in? >> >> General Journal entry >> >> Account: Debit: Credit: >> Fixed Asset Acct. (old truck) $13500 >> Fixed Asset Dep. Acct. $8000 >> New Vehicle Asset Acct. $5000 >> Asset Sale Proceeds (income acct) $500 >> >> Loan Holder $13600 >> New Vehicle Fixed Asset Acct. $18600 >> > Posted by San Diego CPA on February 26, 2009, 3:44 am Please log in for more thread options >I purchased a new vehicle and traded in my old one. Figures are as follows > > Old truck cost: $13500 > Trade in on old truck: $5000 > Accum Dep. on old truck: $8000 > > New truck cost: $18600 > Note Payable: $13600 > > Would this be the correct way to account for the sale of an asset and the > purchase of the new asset with trade in? > > General Journal entry > > Account: Debit: Credit: > Fixed Asset Acct. (old truck) > $13500 > Fixed Asset Dep. Acct. $8000 > New Vehicle Asset Acct. $5000 > Asset Sale Proceeds (income acct) $500 > > Loan Holder $13600 > New Vehicle Fixed Asset Acct. $18600 > Debt Credit Truck (old) 13,500 Accum Depr (old) 8,000 Loss on Disposal 500 Truck (new) 18,600 Notes Payable 13,600 The above is a book entry (financial reporting) the entry for tax purpose is different. For tax purposes, if it's a trade-in, there's no loss recognized (it's considered a like-kind exchange), you build the loss into the basis of the new truck, therefore, the new truck (for tax purposes only) has a cost basis of 19,100 rather than 18,600. Posted by Haskel LaPort on February 26, 2009, 8:45 am Please log in for more thread options > >>I purchased a new vehicle and traded in my old one. Figures are as follows >> >> Old truck cost: $13500 >> Trade in on old truck: $5000 >> Accum Dep. on old truck: $8000 >> >> New truck cost: $18600 >> Note Payable: $13600 >> >> Would this be the correct way to account for the sale of an asset and the >> purchase of the new asset with trade in? >> >> General Journal entry >> >> Account: Debit: Credit: >> Fixed Asset Acct. (old truck) $13500 >> Fixed Asset Dep. Acct. $8000 >> New Vehicle Asset Acct. $5000 >> Asset Sale Proceeds (income acct) $500 >> >> Loan Holder $13600 >> New Vehicle Fixed Asset Acct. $18600 >> > > Debt Credit > Truck (old) 13,500 > Accum Depr (old) 8,000 > Loss on Disposal 500 > Truck (new) 18,600 > Notes Payable 13,600 > > The above is a book entry (financial reporting) > the entry for tax purpose is different. > For tax purposes, if it's a trade-in, there's no > loss recognized (it's considered a like-kind exchange), you > build the loss into the basis of the new truck, therefore, > the new truck (for tax purposes only) has a cost basis > of 19,100 rather than 18,600. I could not disagree more with your GAAP entry. Trade-in values, especially when trucks and autos are concerned mean absolutely nothing. How many of us have walked into a dealership and been offered $500 for our trade-in and then went into another dealership and been offered 10,000? Its all bullshit, a game, a con, certainly not an arms length transaction. The dealership will just raise or lower the asking price of the new vehicle to compensate for what ever they allow on the trade. I will never forget the words of the last auto salesman I walked out on, "I'll give you $10,000 for your trade-in and I don't even want to look at it". "Hey that's wonderful", I said. "Let me pull down my pants and bend over so I can make it easy for you." There are only two things certain when we trade-in a vehicle for a new one, the adjusted basis of the old car and the cash outlay we must make to drive out of the showroom. I say the tax and GAAP entry should be the same. > > Similar Threads Posted Partner's Vehicle October 23, 2006, 7:58 pm Trading in a vehicle June 6, 2009, 5:36 pm How to enter vehicle purchase January 9, 2007, 9:39 pm Adding Vehicle Mileage Icon to QB2007 Pro Home Page August 18, 2007, 4:12 pm