Buying with a trade in

by Glennys Savage
(Medicine Hat, Alberta)

I purchased $10,000 of new office equipment by paying $9300 cash and trading in old equipment with a recorded cost of $700.

What is the entry?



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Hi Glennys,

I'll give you a link to the entries I wrote up for the purchase of a vehicle with a trade-in. Where ever I mention the vehicle account(s), you would substitute it with your office equipment account(s).

You can also ignore the loan entries as you did not assume any debt with your purchase.

You'll find the entries in Common Bookkeeping Entries.

Comments for Buying with a trade in

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Nov 12, 2011
 Class 10 Capital Cost Allowance
by: Tracy, Ontario

Hi,

I have a car already in Class 10 with a UCC of $5000.

I purchased a new car and want to add to class 10.

Do I dispose of the old car at FMV? Or do I continue with the UCC of $5000 plus the new car as I did not take depreciation in other years.

Hope this makes sense! Thanks Tracy
Nov 12, 2011
 Class 10 CCA
by: Lake

Hi Tracy,

To begin this short chat, I recommend you read two articles on the site:

How to Claim Business Vehicle Expenses

How to Claim Input Tax Credits Relating to Business Use of Your Personal Vehicle

Also take a look at the journal entries for How to Record the Disposal and Purchase of a Vehicle.

Now, my question to you, "Did you sell the old car .. or trade it in ... or keep it?

I need to know this to help you out.
Nov 13, 2011
 CCA
by: Tracy

I kept the old vehicle but started using the new vehicle for business.
Nov 13, 2011
 Class 10 Capital Cost Allowance
by: Lake

Hi Tracy,

If you are no longer using the old vehicle for business, I would probably "sell" it back to yourself at fair market value (FMV) so you can remove it from your buisness records and your CCA schedule.

You will need to have some type of third party source to prove the FMV amount you use.

Remember to self assess and pay GST/HST at the time of the "sale' because you have changed the primary use of the asset from commercial to non-commercial. See Change of Use rules for more information.




P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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