The situation is:
- a fully depreciated asset will be traded in for a new one
- trade-in allowance of $250 provided by supplier
- original cost of the new asset is $3,750, after deducting the trade-in allowance ($250), amount needed to pay to supplier is $3,500
Please kindly give me some guidance regarding the treatment of the above exchange of asset under IAS 16.
Furthermore, In this case, there is a gain of $250. How to record the gain? Credit the gain or deduct the gain directly from the cost of the new asset?