A nearly depreciated company truck was traded-in for a new one. The old truck cost $4,800.00 and on March 31, the end of the previous quarter, it had been depreciated $3,180.00. Straight-line depreciation on the old truck is $80.00 per month (DEPRE). The new truck listed for $18,950.00 and Archibald Auto Sales allowed a $2,825.00 trade-in allowance on the purchase of the new vehicle. This trade has no commercial value and no gain or loss will be recognized on this transaction. In addition to the check issued for the new truck, an additional check was issued for $510.00 was issued to the Department of Motor Vehicles the vehicle license fees.
Three entries are required for this trade.
1) Record the depreciation for 3 months. Invoice Number: DEPRE (for depreciation)
2) Record the like-kind asset exchange. Check Number: 31227. Invoice Number: W3571
3) Record the license. Check Number: 31228. Invoice Number: DMVO6