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Post Info TOPIC: Depreciation and trade-ins
Peasie


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Depreciation and trade-ins
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What should be the correct procedure for when a vehicle is used as a trade-in?

I have this situation where an eight year old van valued at around £450 in the books was being used as a £500 trade in for another van. This new (second hand) van was originally £4750 plus VAT but the invoice now shows £4250 plus VAT.

In reality a van has been sold for £500 (with a £50 gain) and another van bought for £4750. But the paper work is going to show a van worth £450 in the books disposed of for £0 and another van bought for £4250.

What should I do? 



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gbm


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Presumably your client is not registered for VAT, thus saving him VAT on £500.

So you have a loss on disposal of £450 and a new van costing £4,250 + VAT.

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Peasie


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Client is VAT registered.

I thought is was maybe six of one or half a dozen of the other - just checking.

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gbm


Guru

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Well if client is VAT registered, then not really sure why the new van isn't being sold for £4,750 + VAT and the old van isn't being p/x for £500 + VAT.

To be honest, the net result is the same, but agree with you that it looks odd!

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