Part exchange: trading in an old asset

In a part exchange, the old asset is handed to the supplier as part of the price of a new one.

Part exchange allowance

the amount the supplier takes off the price for the old asset. It is the proceeds of the old asset

Balance

the rest of the price, paid from the bank

Skelwith trades in van V1 for a new van priced at £22,000. The dealer gives an allowance of £7,200. V1 cost £16,000 and its accumulated depreciation is £9,250.

The new van goes into the books at its full price, not at the cash paid.