Like-kind exchange transaction calculation

  • Total gain is the actual gain that is realized in the exchange. This is the formula that is used to calculate the total gain:

    (Old Asset - Accum Deprec) - (New Asset + Proceeds) = Total Gain

  • Recognized gain is the portion of the total gain you must recognize in the asset addition. This is the formula that is used to calculate recognized gain:

    Proceeds / (New Asset + Proceeds) * Total Gain = Recognized Gain

  • Unrecognized gain is the portion of the total gain that you cannot recognize. This is the formula that is used to calculate unrecognized gain:

    Total Gain - Recognized Gain = Unrecognized Gain

  • The new asset basis is the asset basis you must use when you add the asset, in place of the declared value of the asset. This is the formula that is used to calculate the new asset basis:

    New Asset - Unrecognized Gain = New Asset Basis

  • Deferred loss is the temporary loss incurred when you dispose of an exchanged asset. The loss is deferred because it is later offset by the gain from the new asset addition. The disposal process calculates the loss, and you must move the loss to the deferred loss account. This is the formula that is used by the process to calculate the loss:

    Old Asset - (Proceeds + Accum Deprec) = Loss