In: Accounting
We writeoff original cost of asset and accumulated depreciation
We pay cash and include new asset in our asset register
Journal entry for replacing an asset
Dr new asset XXXX
Dr accumualted depreciation. 36000
Dr loss on disposal of old asset. 2000
Cr cash paid for new asset 40000
Cr removal of old asset 43000
Total credit = 83000
Total debit= 36000+2000+XXXX
83000=38000+XXXX
XXXX=83000-38000= 45000
Hence company record new heating system at $45000.