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Slide 57 Method 1 Substitution Method substitute new asset for old asset Example Pippa Company decides to replace its old oil furnace with a new
Slide 57 Method 1 Substitution Method substitute new asset for old asset
Example Pippa Company decides to replace its old oil furnace with a new gas furnace. The oil furnace has a historical cost of $50,000 with accumulated depreciation of $30,000. The scrap value of the old furnace is $5,000, and the new furnace costs $70,000. Pippa records this transaction as follows:
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| Debit | Credit |
| Entry to remove old furnace: |
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| Debit | Credit |
| Entry to record new furnace: |
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