Question

A company had a bulldozer destroyed by fire. The bulldozer originally cost $124,000. The accumulated depreciation on it was $59,500. The proceeds from the insurance company were $89,500. The company should recognize________

Answer 1

Answer:

$25,000

Explanation:

For computing the gain or loss, first, we have to determine the book value of bulldozer which is shown below:

Book value of bulldozer would be

= Originally cost - accumulated depreciation

= $124,000 - $59,500

= $64,500

And, the proceeds from the insurance company were $89,500

So, the gain would be

= $89,500 - $64,500

= $25,000