When does condemnation occur when replacing equipment?

Condemnation occurs in the context of replacing equipment when the cost of repair exceeds the maximum repair allowance. This threshold is established to ensure that it is financially viable to maintain equipment rather than investing excessive resources into repairs that would surpass its value. If the repair costs exceed this amount, it is more practical and economical to replace the equipment rather than to continue investing in its repairs, indicating that it is no longer a cost-effective solution. The concept of maximum repair allowance helps organizations make informed decisions regarding resource allocation and maintenance of equipment, ultimately leading to more effective management of assets.