Journal entry to clear vehicle from fixed assets

R K · ‎June 13, 2023

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

Rainflurry · ‎June 18, 2023

@R K

The journal entry to record the trade is:

	Debit	Credit
Loan Payable Liability	50,000
Accumulated Depreciation	100,000
Asset (at original cost)		100,000
Gain on trade/Depreciation recapture (other income)		50,000

View solution in original post

R K · ‎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 · ‎June 18, 2023

@R K

The journal entry to record the trade is:

	Debit	Credit
Loan Payable Liability	50,000
Accumulated Depreciation	100,000
Asset (at original cost)		100,000
Gain on trade/Depreciation recapture (other income)		50,000

Topics

Training

Community

Resources

Journal entry to clear vehicle from fixed assets