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I am trying to retire a vehicle we traded in for another vehicle (like-kind exchange). However, I'm not sure how to make GP create the journal entry I want while adding the one vehicle and disposing of the other since there would be no gain/loss on the trade-in. Can someone help me with this?
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Hi Leslie,
How would the above postings change if you also paid cash for the new car? The cost of the old car is 69,170 and it is fully depreciated.
Debit Accum 69,170
Debit Proceeds 11,000 ($31,500 new car-20,500 trade-in value )
Credit Cost of old car 69,170
Credit Cash 11,000
Hi Leslie,
When you make that second JE, is that manual JE to the GL? Or is that what your GL Posting is supposed to look like after you add the asset and do ITC/Cost entry? If the latter, I didn't get the same distributions. Instead, using your example amounts, the GL Posting routine produced a
DR Cost $18,000
CR FA Clearing $18,000
CR Cost $1750
DR FA Clearing $1750
Hi,
When you retire an asset, you can indicate it is a like-kind exchange. The value of the asset you receive would be entered in the 'non-cash' proceeds area. If you received some cash, this is known as 'boot' in the tax world, any gain would be recognized to the extent of boot received. If you are using the tax method on your corporate book, the system will generate an entry that will defer the gain. For example. Let's say your old car cost 12,000 and you had taken 11,250 of depreciation.
1. your basis in the old car is $750
2. you trade the car in and your trade-in value is $2,500
3. you get an $18,000 car you had to pay $15,500 for
4. you realized a gain of $1,750 ($2,500 - $750)
5. Because it's a like-kind exchange, the journal entry is
Debit Accum 11,250
Debit Proceeds 2,500
Credit Cost of old car 12,000
Credit Deferred Gain 1,750
When you book the new car your initial cost is 18,000, go into the book and hit the ITC/Cost button
Use the Misc Cost adjustment field and enter -1,750.
Your beginning 'cost' of the new car will be $16,250
You would then need to make the journal entry
Debit Deferred Gain 1,750
Credit asset clearing account 1,750
It's ugly, but it's doable.
You will be reducing your basis in the new car by the amount of the deferred gain. I don't know how GAAP deals with this kind of thing, but that's how the IRS would handle it.
Kind regards,
Leslie
In Dynamics GP, there is no specific functionality though which you can "trade-in" an old asset for the purchase of a new asset. The process is actually broken down into its base sub processes which are;
When you sell an asset, Dynamics GP records depreciation "if the asset is not depreciated" till the date of the sale, and records the gain/loss in a suspense account to be handled later on. The values are;
Then a separate process is applied either from AP or POP to enter a new asset with a specific acquisition cost "not necessarily related to the sale value at all" Therefore, the fair market value could be considered as the sale value.
Hope this helps,
There could be a gain/loss if the trade-in value is more or less than your net book value for the vehicle traded. You would use the FA Retire transaction to retire the traded vehicle and record the trade-in value as proceeds on the retirement. GP will create the proper entries for you as part of the retirement transaction.
Then, you setup the new vehicle as a new asset.
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