A Machine Costing $132,000 Was Destroyed When It Caught Fire

question 48

Multiple Choice

A machine costing $132,000 was destroyed when it caught fire. At the date of the fire, the accumulated depreciation on the machine was $60,000. An insurance check for $150,000 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 $18,000.
• B) credit to the Equipment account for $72,000.
• C) credit to the Accumulated Depreciation account for $60,000.
• D) gain on disposal of $78,000.

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Definitions:

Entrepreneur

An individual who starts, operates, and assumes the risk of a business venture, aiming to transform innovations into economic goods.

Necessary Risks

Risks that are considered essential to take in pursuit of achieving objectives, innovation, or staying competitive in business.

Entrepreneurs

Individuals who create, organize, and operate businesses, taking on greater than normal financial risks in order to do so.

Business Ownership

The legal possession or control of a business, which may come in various forms like sole proprietorship, partnership, or corporation.