We just traded in my wife's car on a new leased vehicle and I'm trying to figure out the correct procedure for closing the loan on the old car in KMyMoney. I realize this may be more of a general accounting question, but I'm not quite sure how to do this properly within KMyMoney. I'm running KMyMoney 5.1.0 on Kubuntu 20.10 in case that matters.

In KMyMoney I currently have an asset account for the amount we paid for the original vehicle (after trade in) and the accompanying liability account for the loan on that vehicle. It currently is showing over $12,000 still owed on the car but since the value at trade-in was greater than the amount owed and the trade-in was for a lease, I don't see how to "pay-off" the loan in KMyMoney and show that we no longer own the asset in the asset account.

Thanks for any advice you can offer!

Robert

robertrathbone wrote:We just traded in my wife's car on a new leased vehicle and I'm trying to figure out the correct procedure for closing the loan on the old car in KMyMoney. I realize this may be more of a general accounting question, but I'm not quite sure how to do this properly within KMyMoney. I'm running KMyMoney 5.1.0 on Kubuntu 20.10 in case that matters.

In KMyMoney I currently have an asset account for the amount we paid for the original vehicle (after trade in) and the accompanying liability account for the loan on that vehicle. It currently is showing over $12,000 still owed on the car but since the value at trade-in was greater than the amount owed and the trade-in was for a lease, I don't see how to "pay-off" the loan in KMyMoney and show that we no longer own the asset in the asset account.

Thanks for any advice you can offer!

Robert

Sorry, if I am late. I must have somehow missed this one.

Not sure if I got this right, so let me rephrase that. You have an asset account (CAR) and a loan account for it (LOAN). Also, you have a CASH account (which could also be a current account, but it does not really matter here). Now you traded in the car for a new one (which you lease). Here's how I would tackle this with additional categories (GAIN and LOSS). Assuming the following balances:

CAR: 15.000
LOAN: -12.000

Now when trading in you got 14.000 for the car which may have resulted in a 2000 cash payment due to the surplus of the loan. I would enter the following transaction for that deal:

CAR: -15.000
LOAN: +12.000
CASH: +2.000
LOSS: +1.000

After this, the balance of CAR and LOAN are zero and the cash received is in the asset account (CASH). The loss needs to be there because the car had a value of 15.000 and the sum of all splits in the transactions needs to be zero to balance.

Hope that helps.

Thank you, I'll try to reproduce this solution in my situation.

Robert