A company had a tractor destroyed by fire.The tractor originally cost $85,000 with accumulated depreciation of $60,000.The proceeds from the insurance company were $20,000.The company should recognize:
A)A loss of $5,000.
B)A gain of $5,000.
C)A loss of $20,000.
D)A gain of $65,000.
E)A gain of $20,000.

Question

Quizplus · Accepted Answer

The book value of the tractor is $25,000 ($85,000 cost - $60,000 accumulated depreciation). The insurance proceeds are $20,000, resulting in a loss of $5,000 ($25,000 book value - $20,000 proceeds).

A Company Had a Tractor Destroyed by Fire