Equipment with a historical cost of $70,000 and Accumulated Depreciation of $15,000 is junked.No cash is received upon disposal.Which journal entry is necessary?

Question

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When equipment is junked, it is considered a loss on disposal because the historical cost of the equipment exceeds its salvage value. Therefore, we need to debit Accumulated Depreciation - Equipment for its total accumulated depreciation of $15,000 to remove it from the books, and we also need to debit Loss on Disposal of Equipment for the remaining amount of $55,000 ($70,000 - $15,000). Finally, we credit Equipment for its historical cost of $70,000. No gain on disposal is recognized because no cash was received.

Equipment with a Historical Cost of $70,000 and Accumulated Depreciation