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rhillgardenservi
January 19, 2022
Question

Part Exchange old Machinery for New

  • January 19, 2022
  • 1 reply
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Hi. I run QB for a self-employed chap and he has bought a new piece of equipment but used an older (bought pre-QB) machine as part exchange. He uses cash basis and is VAT registered. All equipment has been put through as purchases, not assets. He paid the balance, but now I'm unsure how to record the part exchange element to a) show its paid in full and b) to record it in the VAT account to lower the VAT liability. Please help! Emma

1 reply

paul72
paul72
January 19, 2022

Hi @rhillgardenservi 

 

The item he's part-exchanged should have been invoiced out - with VAT.

This invoice is cleared by payment to a dummy QB account (I use a Contra Account) - which is then used to part-pay the bill received for the new equipment.

 

In practice, the bill received might show the part exchange as a line item - either VATable or as a payment.  In which case ignore the lines & enter into QB at full value - this, together with the invoice out will make sure the asset values & VAT amounts are correct.

 

Hope this helps.

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