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Pls can you explain to me what trade in allowance is regarding replacement cost of an old asset ?
You have an old car and you wish to get rid of it and buy a new Ferrari Testosterone
So you drive you old banger down to the Ferrari showroom and look around
A young person emerges and engages you in conversation about how good the new Ferrari Testosterone performs and you are seriously interested until you are told that the price is $300,000
However, the sales person then asks whether you already have a car and you show her your old Skoda
Now she is a Skoda fan and looks admiringly at your wheels, your under-carriage and your suspension
Then she turns to you and says “If you buy the Ferrari I can let you have $100 off the price of the Ferrari as a trade-in allowance for your Skoda”
So a trade-in allowance is the value attributable to your old car that will be deducted from the cost of buying a new car
OK?
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