Skip to main content
R
R K
June 13, 2023
Solved

Journal entry to clear vehicle from fixed assets

  • June 13, 2023
  • 2 replies
  • 0 views

I need help on this journal entry: 

The vehicle was traded in - Dealer paid off the loan in full directly to the lender - $50,000.  Since no funds were received directly, I'm not sure how to post this.

   On the books - Asset $100,000 (debit) FMV

   Accumulated Depreciation ($100,000) (credit)

   Liability - loan for auto balance due $50,000. (credit)

   Dealer took the vehicle then paid the lender's loan = $50,000 

The owner has decided to lease a new vehicle.  (I know how to post that)

 

Many thanks   Ruth

 

   

Best answer by Rainflurry

@R K 

 

The journal entry to record the trade is:

 

 DebitCredit
Loan Payable Liability50,000 
Accumulated Depreciation100,000 
     Asset (at original cost) 100,000
     Gain on trade/Depreciation   recapture (other income) 50,000

2 replies

R
R KAuthor
June 17, 2023

I have reviewed all your "Suggested" answers to the question I submitted.  I will contact the CPA for the correct entry.

 

 

Rainflurry
RainflurryAnswer
June 18, 2023

@R K 

 

The journal entry to record the trade is:

 

 DebitCredit
Loan Payable Liability50,000 
Accumulated Depreciation100,000 
     Asset (at original cost) 100,000
     Gain on trade/Depreciation   recapture (other income) 50,000
    Terms & ConditionsAccessibility statement