Credit the account Equipment (to remove the equipment’s cost) Debit Accumulated Depreciation (to remove the equipment’s up-to-date accumulated depreciation) Debit Cash for the amount received. Get this journal entry to balance.
What is cash when selling property, plant, and equipment?
When selling property, plant, and equipment for cash: The seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold. Gains on the cash sales of property, plant, and equipment: Are the excess of the cash proceeds over the book value of the assets sold.
What should be considered at the time of equipment replacement?
At the time of replacement a well-designed replacement policy should be adopted, rather than considering only the factors pertaining to the particular equipment involved, should compare thoroughly all the existing equipment with its possible replacement.
Why is it not economical to replace old equipment?
It may be thought of replacing the old equipment and machinery which creates unpleasantness i.e. give rise to unsafe conditions for workers and leads to accidents, making the environment noisy and smoky etc. The existing units/equipment have outlived their effective life and it is not economical to continue with them.
How much money can a firm save by replacing an old machine?
If the firm replaces the old machine with the new machine, it expects to save $2.5 million in operating costs each year over the next four years. Both machines will have no salvage value in four years. If the firm purchases the new machine, it will also need an investment of $190,000 in networking capital.
Is the problem of equipment replacement a routine phenomenon?
The problem of equipment replacement is a routine phenomenon of industrial enterprises. Normally, it is experienced in systems where machines, individuals or the capital assets are the main job performing units. It is the common phenomena that performance or efficiency of an item in a system deteriorates with the passage of time.
