Trading in Rental Equipment

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 Point-of-Rental for the new piece of equipment for the total price paid (excluding the trade-in credit).

•The old equipment is sold on an Asset Sales contract to 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 the bill to the net amount paid to the vendor. The purchase price minus the trade-in value.