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Dear john,could u explain the part exchange of an asset .what does it mean and what are the ledger entries for the asset account ,accumulated depreciation and disposal account.for example instead of selling an asset for 19000 it was exchanged for a new machine costing 60000, a credit of 19000 being received upon exchange.
Thanks on advance ,
In future you must ask in the Ask the Tutor Forum if you wish for me to answer. This forum is for students to help each other.
The entries are exactly the same as for any disposal, except that instead of Dr Cash Cr Disposal account, you Dr Asset account Cr Disposal account with the amount of part-exchange (in your example 19,000).
The remaining cash paid for the new asset (41,000 in your example) then entry is Dr Asset Cr Cash.
So the total to the asset account for the new asset is now 60,000, which is correct.
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