On the books I have some fixed assets that we have been depreciating and now we have purchased new fixed assets to replace them. The vendor gave us a trade-in value towards our new purchase. How do I apply the trade-in value to my entry or do I just record the sale as normal using the new cost (which includes the trade-in value discount)?

By saying that you purchased new assets to "replace them," I'm assuming you mean like assets. This creates a trade-in entry, rather than a sale and then a new replacement.

Make sure depreciation is caught up to this point first. i.e. if you're on a calendar year and you did this June 1, then you need to depreciate 5 months. You then need to reverse out the old asset and its associated depreciation. i.e. dr the accumulated depreciation and cr the old asset.

Don't do anything with the "discounted" trade-in value. That number should never be on your books. You record assets at cost (although gains are deferred), not at a reduced value that came from a trade-in. This isn't the same thing as getting a discount off something. It's not a discount at all and you can't think of it that way.

If you buy something for $50,000, the company wants $50,000 in some form or other. A trade-in is something you are giving them to help cover the $50,000 of costs -- it's not a discount off the price. Yes, it reduces how much is left that you must give them, but you gave them an asset for it, so you still gave something up for it. The rest will now or eventually get paid in cash. Which is another asset you are giving up for it. And giving up an asset is giving up an asset. (Please note that if you got an outright discount for some reason, that is different and you would reduce that from cost. But a trade-in isn't a "discount.")

Where was I? OK, they allow you however much for the trade-in and they want the rest in some form. So whatever cash you paid, credit that. If you still owe any of that, you credit a notes payable. So your cash, your trade-in and your note should add up to the original cost of your new assets.

Then use the book value of the old assets and the trade-in allowance to determine a gain or loss. i.e. did they allow more or less than your book value? If you have a loss, debit it. If you have a gain, don't take it -- reduce it off the cost of the new assets. By doing that, you're deferring the gain. It'll get made up for later while depreciating it or later if it's outright sold. If that doesn't make sense, don't worry about it -- just do it.

Did you follow all that? Trade-in for like items is a little weird.

Costs of new item $50,000; trade-in allowance given $10,000 so cash price paid $40,000. The next book value of the old asset it $20,000. So at what cost do I capialize the new assets and how do you arrive at that.

Cost - accumulated depreciation - realisation = profit/loss on sale
Acquisition - realisation = Net acquisition price

If you understand what I have said you will remove the old asset and there will be a new asset at its full acquisition value

I have a question and hope to get your advise

I have FA at 20,000 with accumulated depreciation of 15,000 then I traded my FA with the payment of my rent 6000, which according to the formula above I should have a gain of 1,000 which should be recorded in my FA (though this is I am not sure).

Could you please provide me what should be the accounting entries for the scenario I have described?

I am having hard time with it. Appreciate your assistance in advance.

Old Assets RM3600.00 , Trade in Price RM800.00, New Assets RM 3000.00

Accumulated depreciation RM 2880.00

How to I put the account entry

Here is my story: On 30 September, furniture with a cost of R 10 000 was traded in for a new one. The accumulated depreciation thereon was R 6000 on 1 January 2012. A replacement furniture was purchased for R 35 000 on 1 October 2012 and a trade-in value of R 4 000 on the old equipment was allowed for the purchase of the new furniture.

The financial Year ended 31 Dec 2012

morning

please helps me I have two questions

first: about trade in of fixed asset
example:alpha bought a new truck from beta motors for R 178 246 and trades in an old truck for R 150 000. The old truck cost R 170 538, and the book value on the date of the trade in was R145 740

please help me how open a General Journal

second: about calculation of accumulated depreciation when the asset is sold during the year

you can provide me an example

thanks