Overview: When trading in older rental equipment on the purchase of new rental equipment, the Purchase Price (cost basis) of the new equipment should be recorded as the total of the money paid for the new equipment plus the trade in value of the old equipment. The old equipment must be removed from the system and is done by selling the equipment to your vendor and using a credit memo to pay the invoice.
While we recognize there are other methods for accomplishing this procedure, this is the recommended procedure within Point-of – Rental.
•A purchase order is entered into Point-of-Rental for the new piece of equipment for the total price paid (excluding the trade in credit).
•The old euipment is sold on an Asset Sales contract to the your Vendor for its trade-in value. You may need to add your vendor as a customer.
•Pay the amount due on the Asset Sales contract with a Credit Memo disbursed to the Trade-In disbursement item. (You may need to add the disbursement item under Configuration. The G/L account number for this disbursement should point to a Trade In Account where it can be used to create the credit for the trade in.)
•The accrued depreciation for the old equipment will automatically be recaptured and posted through your G/L entries.
•When the PO is imported to create the bill (or the bill is manually created) in your accounting software, it is created for the total price of the new equipment (excluding the trade in credit).
•Create a credit via the Trade In account for the trade in value. This entry will zero out the Trade In account.
•Apply the credit to the bill reducing bill to the net amount paid to the vendor. Purchase price minus the trade in value.