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Is the new Cadiallac that you are buying - bought under a capital lease? Meaning you own the vehicle at the end of the lease?
What is the cost of the old Cadillac on books and the accumulated depreciation and loan amount?
What is the cost of new Cadillac? Loan amount?
Entry does not look right. Why would the retained earnings be debited?
When you trade in an old car for a new one, the transaction is considered a like-kind exchange. Generally, no gain or loss is recognized
No - it is a straight lease and at the end of the term they keep the car
We didn't really trade it in - we sold the old one and leased a new one-they put the 8000 on the new lease to lower the payments I believe
The asset account 1570 had a balance of 67258.70 at the beginning of the month,deprecitation was 12,305.99, loand on vehicle was 9027.25 and principal 1294.08
yes, I am looking at my balance sheet and double checked with the account in the computer
As per the entries - Loan on Auto is
Loan on Auto debit 9,027 Principle on Auto debit 1,294
But you mentioned that Loan was $8,476 which was paid off?
Which of the above amount is correct?
If $8,476 is the correct amount than the entry will be
Accum Deprec Auto debit 12412 Loan on Auto debit 9027 Principle on Auto debit 1294 Loss on Auto Sale debit Balancing figure
New Lease Cost debit 8,024
Transp Equip credit 67258
So are you saying the expense loss on auto figure should be $36501?
Yes, it sounds unreasonable but based on the numbers you provided from the Balance Sheet - this is what it would be presuming that you have reported 100% business use on this vehicle.
I do not understand why is the depreciation so low.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.