A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached.An insurance recovery was received.The net book value of these group asset accounts would be decreased by the

Question

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The net book value of the group asset accounts should be reduced by the original cost of the truck less the insurance recovery received. This is because the company has already recognized depreciation expense on the truck for the period it was in service, and the insurance recovery represents a partial reimbursement of the original cost. Therefore, the net book value of the asset accounts should reflect the revised carrying amount of the group assets after considering the insurance recovery.

A Company Using the Group Depreciation Method for Its Delivery