A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $90,000. The company should recognize:

Question

Quizplus · Accepted Answer

The book value of the bulldozer at the time of the fire was $125,000 (original cost) - $60,000 (accumulated depreciation) = $65,000. Since the insurance proceeds were $90,000, which is $25,000 more than the book value, the company should recognize a gain of $25,000.

A Company Had a Bulldozer Destroyed by Fire