If you take a trade in on a sale there are basically three things you can do with it. You can stock it and resell it, you can trash it, or you can repair it and then stock and resell it.

If you are going to keep the item and resell it:
If the trade in item currently exists in your inventory list, put it on the sales document with a negative qty and the price you are allowing as a trade in.

If the item does not exist in your inventory,create the item, and then put it on your sales document with a negative qty and rate.

If the item is non-repairable:
Create a discount item called trade-in and point it to a trade-in expense account, then use that item on sales document with a qty of one and the rate.

If the item is repairable and you will repair it it gets more complicated:
1. Create an other current asset account called trade-in WIP (WIP = Work in Progress)
2. Create a discount item called trade-in-WIP and point it to the trade-in-WIP account.
3. Use the trade-in-WIP item on the sales document with a qty of one and set the rate.

That gets the trade in on the books as an asset but does not increase your inventory since the item is not ready for sale.

As you repair it, use inventory adjust, set the adjusting account to the trade-in WIP account and lower the quantity of the items used to repair it. If you had to buy things that are not in inventory to repair it, when you enter that bill use the expense tab and select the trade-in WIP account.

That accumulates all the costs of the repair and the trade in amount in one account. When the item is repaired and ready for sale:

Use inventory adjust, set the adjusting account to the trade-in WIP account, check mark the value adjustment box, find the item in the item list, increase the qty on hand by one in the new quantity column and increase the total value by adding the total in the trade-in-WIP account to the present total value and entering that new total in the new total value column.

That moves the cost of the item and its repair costs to the inventory item.