The first thing I'll say is that Farm Fund$ does not do any actual depreciation calculations. The depreciation area is where you need to go and fill in the amount of depreciation that your accountant is using. Our reasons for not calculating depreciation are simple, the calculations used for tax are many and complex and are constantly changing. Other programs that do nothing but calculate depreciation run well over the total price of our programs. Since most producers are using accountants for their tax returns who are computing the depreciation for them, we thought it best to just allow you to enter in the figures from your accountant.
When you trade in a piece of equipment the new piece of equipment will get its cost based on the remaining book value of the old piece of equipment plus any cash paid and loans taken out. For example:
1. If you buy a new piece of equipment for $50,000. 2. You write out a check for $5,000 3. You take out a loan for $25,000 4. You trade in a piece of equipment for $20,000 (however because you depreciating the equipment off quickly for tax purposes it only had a remaining book value of $10,000).
The new piece of equipment will actually have a cost of $40,000 ($5,000 check + $25,000 loan + $10,000 book value of trade).
The only other factor in this would be any depreciation that you take on the traded asset in the year of the trade. Since this depreciation would have reduced the book value of the traded asset, Farm Fund$ will use it to reduce the cost of the new equipment.
This method of handling trades is the method used for federal tax purposes and should work out to what your tax preparer calculates.
If you have any descrepancies, please give our support department a call.