IRC 1031 Trade-In of Fixed Asset with Loan and Depreciation
travis88
Member Posts: 18
I've created a journal entry four different times, and it still seems incorrect (or unbelievable).
I have an asset that initially cost $33,702.00 to purchase. We've taken full depreciation of the $33,702.00. It is bound to an existing outstanding loan with a payoff of $27,231.56
The asset was sold/traded for $34,600.00.
The loan was immediately paid off for $27,231.56 and the remaining $7,368.44 was immediately applied to a new loan for a different asset (the trade-in).
The newly purchased asset was $90,000.00
Is the below actually right?
DR - Cash... $34,600.00 DR - Accumulated Depreciation... $33,702.00 DR - Existing Loan... $27,231.56 DR - New Loan... $7,368.44 CR - Old Fixed Asset... $33,702.00 CR - New Fixed Asset... $69,200.00
It just doesn't seem right, at all... I've tried it a few different ways. That's a gain of $69k that is being put on the new asset?
The only way that I was able to do it that actually "seems" correct is;
DR - Existing Loan... $27,231.56 DR - New Loan... $7,368.44 DR - Accumulated Depreciation... $33,702.00 CR - Depreciation Expense... $33,702.00 CR - Old Fixed Asset... $33,702.00 CR - New Fixed Asset... $898.00
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