Answer:
a). The credit to the equipment account=$173,000
b). Credit to the accumulated depreciation account for $103,000
c). gain on disposal=$152,000
Explanation:
a). The formula for the book value of the equipment when it caught fire can be expressed as;
Book value=Acquisition cost-accumulated depreciation
where;
acquisition cost=$276,000
accumulated depreciation=$103,000
replacing;
Book value=(276,000-103,000)=$173,000
The credit to the equipment account=$173,000
b). Credit to the accumulated depreciation account for $103,000
c). The formula for calculating the gain from disposal is;
gain on disposal=insurance check-book value
where;
insurance check=$325,000
book value=173,000
replacing;
gain on disposal=325,000-173,000=$152,000
