A Truck Costing $32,000 Was Destroyed When Its Engine Caught

question 108

Multiple Choice

A truck costing $32,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated depreciation on the truck was $16,000. An insurance cheque for $37,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition of the truck will include a

• A) gain on disposal of $5,000.
• B) credit to the Truck account for $16,000.
• C) credit to the Accumulated Depreciation account for $16,000.
• D) gain on disposal of $21,000.

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Definitions:

Rhode Island

The smallest U.S. state by area, located in the New England region, known for its sandy shores and maritime history.

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