Trailer Lease Buyout
My client is a sole proprietor. I took over his bookkeeping at the beginning of this year. When I took over, he was leasing a trailer and the payments were posted as an expenses (with the sales tax also split out and posted). I continued that procedure.
He has now paid out the lease and owns the trailer. Let's say the original purchase price of the trailer was $6,000.00 (still waiting for the paperwork to show the breakdown and when he purchased it etc).
Let's also say for this example the buyout amount was $4,500.00 before sales tax.
I'm assuming I now need to show this trailer as an asset. I need some help in posting this properly. Is the total asset amount going to be $6,000.00 or $4,500.00?
I would appreciate some help. Thank you.
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