A company had a tractor destroyed by fire. The tractor originally cost $142,000 with accumulated depreciation of $75,300. The proceeds from the insurance company were $37,000. The company should recognize:

Question

Belen Bridges

Business

23 January, 05:33

A company had a tractor destroyed by fire. The tractor originally cost $142,000 with accumulated depreciation of $75,300. The proceeds from the insurance company were $37,000. The company should recognize:

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Answers (1)

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Amelie Lane · Answer 1

The company should recognize a loss of 29600$ on this economic event.

Explanation:

The company tractor costing 142000$ having net book value of 66700$ was destroyed by fire. The future economics benifts that company can take from this was equal to NBV i. e. 66,700 $. So this was company loss however proceed from insurance company mitigate this loss from 66700$ to 29700$ (66700$-37000$).

Entry company will make in his book in under.

Credit Asset Tractor 142000$

Debit Loss 29700$

Debit Cash 37000$

Debit Ac Dep 75300$