Question

A company had a tractor destroyed by fire. The tractor originally cost $137,000 with accumulated depreciation of $70,800. The proceeds from the insurance company were $32,000. The company should recognize:

Answer 1

Answer:

A gain of $29,800.

Explanation:

The computation of the amount recognized is shown below:

Original Cost $137,000

Less:  Accumulated Depreciation ($70,800)

Written down value $66,200

Less  Proceeds from Insurance company ($96,000)

Gain   $29,800

Therefore the gain is $29,800 and the same is to be recognized