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

Business

Harrington

29 June, 07:57

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:

+5

Answers (1)

Know the Answer?

Cochran · 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$