Relacement of old machine without consideration

If it is warranty, that means you will replace old one with a new machine, and your company will recognise a provision based on past expectations for the number of units sold. Ex.

sold 1000 units

doubtful returns 10 units

create a provision for 10 @ 10₹ 

Warranty expense 100₹

To Provision liability 100₹

when one piece is returned, then replace it with a new machine and reduce provision liability like

Provision liability a/c 10₹

To Inventory (finished goods) a/c 10₹

gst is not involved as there is no cash transaction. If your reimbursing cash for the machine, then, you can reverse gst along with cash.

if you need more info borrow a CA - AS books as B.com books don’t cover the warranties treatments. All the best