Question

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Answer 1

Answer:

A gain of $21,000

Step-by-step explanation:

Data Provided in the question;

Original cost of the delivery truck = $84,000

Accumulated Depreciation account amounted at the time of fire = $57,000

Reimbursement received from its insurance company = $48,000

Now,

Book value of the truck at the time of fire

= Original cost - Accumulated Depreciation

= $84,000 - $57,000

= $27,000

Since,

The amount received as the reimbursement from its insurance company is higher than the book value at the time of the fire

Thus, the fire will result in a gain

The amount of gain = Reimbursement received - Book value

= $48,000 - $27,000

= $21,000