Question

A company had a tractor destroyed by fire. The tractor originally cost $128,000 with accumulated depreciation of $62,700. The proceeds from the insurance company were $23,000. The company should recognize:

Answer 1

The company should recognize a loss of $42,300.

Explanation:

Original cost of tractor: $128,000

Accumulated depreciation:  $62,700

So, current value of tractor: $65,300

Proceeds from the insurance company: $23,000

Hence, the company made a loss of: $65,300-$23,000

The loss = $42,300