Answer:
<em>2.Credit Equipment 100,000</em>
<em>3. Debit accumulated depreciation 60,000</em>
Explanation:
When trading equipments to determinate if there is or not a gain or loss we have to know if there is commercial substrance.
When that is the case then, we can post the difference in value as gain or loss.
When there isn't, we enter the new equipment for the amount of the net book value of the equipment to avoid recording gain or losses.
Equipment (new) 80,000 debit
Acc Dep- Equipment (old) 60,000 debit
Equipment(old) 100,000 credit
Gain at Disposal 40,000 credit
--to record when there is commercial substance--
Equipment (new) 40,000 debit
Acc Dep- Equipment (old) 60,000 debit
Equipment(old) 100,000 credit
--to record when there isn't--
In both cases, whe have to write-off the old equipment thus, debit the accumulated depreciation balance.
and credit the old equipment cost
