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A company has 2 vehicles with cost of $40k, accumulated depreciation of $40k, net book value of $0.
The company trades in these 2 vehicles for a new vehicle for a cost of $30k. There was no cash paid. How should this be recorded?
Since there was not boot, there would be no gain recognized. There would be no loss on the transaction, since fair value of old assets ($30k) is greater than the book value ($0).
I'm thinking the entry is Dr. Accumulated Depreciation $40k and Cr. Old Vehicles $40k. And the new vehicle would have a cost basis of $0 and just not get on the books.
Thanks.
The company trades in these 2 vehicles for a new vehicle for a cost of $30k. There was no cash paid. How should this be recorded?
Since there was not boot, there would be no gain recognized. There would be no loss on the transaction, since fair value of old assets ($30k) is greater than the book value ($0).
I'm thinking the entry is Dr. Accumulated Depreciation $40k and Cr. Old Vehicles $40k. And the new vehicle would have a cost basis of $0 and just not get on the books.
Thanks.