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Hello QB Community,
Hoping someone can help solving this accounting puzzle.
The owner of a multi-member LLC trades-in his personal vehicle to purchase a vehicle in the name of the LLC.
New vehicle is wort 55k.
Trade-in Vehicle (contributed by the owner) is worth 40k.
Now here's he tricky part: there's a balance due on the trade-in vehicle of 50k, which means the vehicle has negative equity.
There are 10k of negative equity from the previous loan being passed on to the new loan.
How would you go about accounting for this?
Thanks!
Since the trade in is a personal vehicle, it has nothing to do with the business.
Enter the purchase of the new vehicle and include the roll over debt of 10K in the purchase price.
Thank you for your response Rustler. The vehicle is a personal asset, but is being contributed by the owner of the LLC, so I'd think that it does have something to do with the business. After all, we account for other contributions made by the owners.
In an other article, I read that in the case of an owner contributing a personal vehicle as trade-in, we would consider the value of the trade-in an Owner's Contribution. I don't know if it's correct, but it does make logical sense.
In this case though, with both an asset and a liability being contributed by the owner, I'm wondering if that'd be different.
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