Frederik Company owns specialized equipment with an original cost of $235,000. The company has fully depreciated the asset over the past 5 years and has now made the decision to retire the asset. Which journal entry would be required to record the retirement of this equipment?

Question

Quizplus · Accepted Answer

To record the retirement of fully depreciated equipment, the journal entry should debit Accumulated Depreciation-Equipment and credit Equipment for the original cost of the asset. This reduces the balance in both accounts to zero, reflecting that the asset has been fully retired. Option A incorrectly includes a debit to Equipment, which should already have a zero balance after being fully depreciated. Option B incorrectly includes a debit to Depreciation Expense, which should not be recorded at the time of retirement. Option C incorrectly includes a credit to Depreciation Expense, which would not be appropriate in this situation.

Frederik Company Owns Specialized Equipment with an Original Cost of $235,000