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