A Machine Costing $176000 Was Destroyed When It Caught Fire

question 72

Multiple Choice

A machine costing $176000 was destroyed when it caught fire.At the date of the fire the accumulated depreciation on the machine was $80000.An insurance check for $200000 was received based on the replacement cost of the machine.Recording the insurance proceeds and the disposition of the machine will include a(n)

• A)gain on disposal of $24000.
• B)decrease to Equipment for $120000.
• C)increase to Accumulated Depreciation for $80000.
• D)gain on disposal of $104000.

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Definitions:

Net Income

Profit calculated as the difference between total revenues and total expenses, indicating the financial performance of a company over a period.

General Ledger

A complete record of all financial transactions over the life of a company, used to compile the financial statements.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for accruals, deferrals, and other adjustments.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts in preparation for the next accounting period.