Equipment with a historical cost of $50,000 and Accumulated Depreciation of $50,000 is scrapped.What journal entry is necessary?

Question

Quizplus · Accepted Answer

The equipment is being scrapped, which means it has no remaining value and must be removed from the books. This would involve a debit to Accumulated Depreciation, representing the total depreciation taken on the equipment over its useful life, and a credit to Equipment, representing the removal of the equipment from the asset section of the balance sheet. No cash transaction is involved in this scenario, so options B and C can be eliminated. Option A would be appropriate if the equipment were being sold or disposed of in a different manner, but in this case, it is being scrapped, so the book value is $0.

Equipment with a Historical Cost of $50,000 and Accumulated Depreciation