AS Accounting....PART EXCHANGE???

[shaikh abdul waheed]

can anybody provide a clear note or any other material to understand part exchange clearly.AS LEVEL

 

[Dr Srinivas A]

can anybody provide a clear note or any other material to understand part exchange clearly.AS LEVEL

Part exchange : If a business wants to sell off or dispose the existing non current asset (fixed asset) part exchange deal will be organized with the supplier. part exchange amount or allowance will be deducted from the total amount paid to buy new non current asset (Fixed asset).

Example :

Old Vehicle
Cost: £3,000
Acc. Depn: £1,734
NBV: £1,266
Part Exchanged for: £1,000
So loss on disposal of: £266

New Vehicle :
Cost: £4,000
Part ex from old van: £1,000
Balance paid: £3,000


Wipe out old van
(3,000) Motor Vehicles - Remove capital cost
1,734 Motor Depn. - Remove acc. depn.
1,000 Motor Vehicles - Part ex. proportion of value of new van
266 Disposals - The loss on the valuation (swap if it's a profit)

Put in new van
3,000 Motor Vehicles - Balancing amount paid
(3,000) Bank - Actual payment