Final answer:
Matterhorn AG simply removes the fully depreciated delivery equipment from its balance sheet with no gain or loss as no residual value was received.
Step-by-step explanation:
When Matterhorn AG retires its delivery equipment that originally cost $44,000, and the accumulated depreciation is also $44,000, this means the book value of the equipment is nil since the cost of the equipment has been fully depreciated. In this scenario, no gain or loss is recorded on the disposal of the asset. No residual value implies that the company did not receive any money upon disposal of the equipment.
To record this transaction, Matterhorn AG would make a journal entry to remove the equipment and its accumulated depreciation from the balance sheet. The entries would debit Accumulated Depreciation for $44,000, credit Equipment for $44,000, and recognize no gain or loss since the equipment was fully depreciated and no residual value was received.
- Debit Accumulated Depreciation for $44,000.
- Credit Equipment for $44,000.
No residual value received and no gain or loss to recognize, as the asset was completely depreciated.