Yanik Company's delivery truck which originally cost $84000 was destroyed by fire. At the time of the fire the balance of the Accumulated Depreciation account amounted to $57000. The company received $48000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Question

Quizplus · Accepted Answer

To calculate the gain or loss from the destruction of the truck, we need to compare the book value of the truck (cost - accumulated depreciation) with the insurance reimbursement received.

Book value = Original cost - Accumulated Depreciation 
Book value = $84,000 - $57,000 
Book value = $27,000

Insurance reimbursement = $48,000

Since the insurance reimbursement is greater than the book value, there is a gain.

Gain = Insurance reimbursement - Book value 
Gain = $48,000 - $27,000 
Gain = $21,000

Therefore, the correct answer is D) $21,000 gain.

Yanik Company's Delivery Truck Which Originally Cost $84000 Was Destroyed