Equipment Costing $210,000 Was Destroyed When It Caught on Fire

question 194

Multiple Choice

Equipment costing $210,000 was destroyed when it caught on fire. At the date of the fire, the accumulated depreciation on the equipment was $84,000. An insurance check for $240,000 was received based on the replacement cost of the equipment. The entry to record the insurance proceeds and the disposition of the equipment will include a

• A) gain on disposal of $30,000.
• B) credit to the Equipment account of $126,000.
• C) credit to the Accumulated Depreciation account for $84,000.
• D) gain on disposal of $114,000.

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Definitions:

Explanandum

Rephrased: The subject or occurrence that an explanation is attempting to account for in research or analysis.

Outcome

In probability theory, a single, non-compound result among a range of possible results.

Event

An outcome or set of outcomes for which we want to know the probability.

Favorable Outcome

An outcome included in an event.