How to Record Disposal of Fixed Asset and Acquisition in the same time (Trade-In) Business Central

 

A company is going to acquire a new car for $100,000. However, the supplier agrees to give a discount of $5,000 if the company agree to trade-in an old car with the new car. The cost of the old car is $ 120,000 and accumulated depreciation of $ 112,500.

It means the company sells an old car for $ 5,000 and buys a new car that costs $ 100,000. They end up paying $ 95,000 only. The total loss of disposal will be as follows: -

Loss from disposal = $ 5,000 – ($ 120,000 – $ 112,500) = $ 2,500

Account	Debit	Credit
New Vehicle	100,000
Accumulated Depreciation – Old Vehicle	112,500
Loss on disposal	2,500
Fixed Assets – Cost of old Vehicle		120,000
Cash		95,000

Business Central able to capture the activities without hassle.

    1.       To record the Disposal of asset with a loss

Page: Sales Invoice

i.                     You can select the customer that the fixed asset is selling to and select the fixed assets that you are disposing.

ii.                   The Amount will be the discount amount that the supplier is offering for the asset trade-in. 

           

iii.             Checking in Preview Posting, the accounting entries will be as per screenshot below. The old asset cost and accumulated depreciation is reversed, and loss of disposal is recorded.

iv.               You may print the Sales Invoice/Tax Invoice from this page as source documents.

v.                 Post the sales invoice once details are recorded according to the agreed terms.

    2.       To capitalise the new asset to Fixed Asset during the Trade-In

 

Page: Fixed Asset Card

i.                     Create the new asset detail for the new asset in Fixed Asset card

Page: Fixed Asset G/L Journals

i.                     Record the Fixed Asset Cost with the original acquisition cost.

ii.                   In the next line after the acquisition cost, enter the discount of the new asset for the trade-in of old asset. Note that the Account Type here will be the “Customer”, the supplier that offering discount for the old asset trade-in.

iii.                 Following with the next line will be the balance amount of the acquisition after the discount. The Account Type here will be the “Vendor”, the supplier that you purchase the new asset from.

iv.                     Check the accounting entries for this transaction from Preview Posting.

v.                       Proceed to post the entry in Fixed Asset G/L Journals.

vi.                     The balance in receivable in “AR Aging” should be offset after the posting.

 vii.                     The amount payable after the discount will be as follows in “AP Aging”.

viii.                     Do remember to change the old asset status to “Inactive” in Fixed Asset Card.