Question: A machine costing $171,600 was destroyed when it caught fire. At the date of the fire, the accumulated depreciation on the machine was $84,000. An insurance check for $203,800 was received based on the replacement cost of the machine. The entry to record the insurance proceeds and the disposition of the machine will include a: a) gain on disposal of $116,200. b) credit to the Equipment account for $119,800. c) gain on disposal of $32,200. d) credit to the Accumulated Depreciation account for $84,000.
Question: A machine costing $171,600 was destroyed when it caught fire. At the date of the fire, the accumulated depreciation on the machine was $84,000. An insurance check for $203,800 was received based on the replacement cost of the machine. The entry to record the insurance proceeds and the disposition of the machine will include a: a) gain on disposal of $116,200. b) credit to the Equipment account for $119,800. c) gain on disposal of $32,200. d) credit to the Accumulated Depreciation account for $84,000.
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 59P
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Transcribed Image Text:Question:
A machine costing $171,600 was destroyed when it caught fire. At the date of the fire, the
accumulated depreciation on the machine was $84,000. An insurance check for $203,800 was
received based on the replacement cost of the machine. The entry to record the insurance
proceeds and the disposition of the machine will include a:
a) gain on disposal of $116,200.
b) credit to the Equipment account for $119,800.
c) gain on disposal of $32,200.
d) credit to the Accumulated Depreciation account for $84,000.
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