Question

A company had a tractor destroyed by fire. The tractor originally cost $141,000 with accumulated depreciation of $74,400. The proceeds from the insurance company were $36,000. The company should recognize:

Answer 1

The correct answer is "$30,600". The further explanation is given below.

Step-by-step explanation:

The given values are:

Tractor's cost

= $141,000

Accumulated depreciation

= $74,400

Now,

The book value on sale's date will be:

=
`Cost-Accumulated \ depreciation`

=
`141,000-74400`

=
`66,600` ($)

The Loss on sale is:

=
`66,600-36,000`

=
`30,600`