Equipment with a historical cost of $60,000 and Accumulated Depreciation of $50,000 is scrapped.No cash is received upon disposal.What journal entry is necessary?

Question

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When equipment is scrapped, it is considered a disposal and a loss on disposal of equipment may need to be recognized. The journal entry necessary is to debit Accumulated Depreciation for $50,000, debit Loss on Disposal of Equipment for $10,000 and credit Equipment for $60,000. This recognizes that the equipment has been disposed of, and that there is a loss on disposal of $10,000 due to the historical cost being higher than the accumulated depreciation. No cash is received upon disposal, so there is no cash account involved in the entry.

Equipment with a Historical Cost of $60,000 and Accumulated Depreciation