Sale of fixed asset by trade in with a supplier

TrunxsonTrunxson Member Posts: 1

I have a camera lens, one of my fixed assets, that I have disposed of but as it is less than a year old have not applied any depreciation.
I sold the old lens by trading it in but in doing this got more than I paid for it . The Seller has issued me with a receipt showing the new lens and the old as traded Part ex.
How does Wave handle a fixed asset process in this example

Old lens purchase receipt 1500
Old lens trade in 2000, gain 500
New lens purchase price 4500
Total of new receipt 2500

edited December 26, 2018 in Accounting

Comments

  • MikegMikeg Member Posts: 284 ✭✭

    If you are in the US, IRC 1031 allows taxpayers to exchange like kind property tax free. In your example above the have a gain of $500 which is deferred. The $500 reduces the basis of the new property. You cost basis for the new lens is $4000. Original cost less deferred gain. I'm assuming you paid out $2500. You would add that additional amount to your cost basis of your original purchase. $1500+$2500=$4000. Form 8824 will need to be completed. Please let me know if you have any questions or tax assistance. I am able to service client throughout the US.

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