When equipment that is fully depreciated is discarded:

Question

Quizplus · Accepted Answer

When equipment that is fully depreciated is discarded, it should be removed from the books by debiting Accumulated Depreciation and crediting Equipment. This will reduce both the asset and accumulated depreciation accounts to zero. Debiting the original cost of the asset (A) would be incorrect as the asset has already been fully depreciated, so the cost has been expensed in previous periods. Crediting the balance of Accumulated Depreciation (B) is not enough, as it does not remove the equipment from the books. Choosing none of the above (D) is also incorrect, as there is a specific accounting treatment for fully depreciated and discarded equipment.

When Equipment That Is Fully Depreciated Is Discarded