Hopefully someone can assist me with the accounting entry when a trade-in is received when purchasing a new boat. The part of the entry that is confusing me is as follows:

If the customer receives a $5,000 trade-in value against the purchase of a new boat:

a) what is the correct calculation method for determining the ACV of the trade-in?

b) when posting the cos of sale of the trade-in (once sold), where do you post the difference between the trade-in amount of $5,000 and the ACV?

All help will be appreciated.

Thanks.

Barbara