Wallace Company Had a Building That Was Destroyed by Fire

question 17

Essay

Wallace Company had a building that was destroyed by fire.The building originally cost $650,000,and its accumulated depreciation as of the date of the fire was $300,000.The company received $320,000 cash from an insurance policy that covered the building and will use that money to help rebuild.Prepare the single journal entry to record the disposal of the building and the receipt of cash from the insurance company.

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Definitions:

Positive Economics

The branch of economics that focuses on objective analysis and facts to describe how economies actually work.

Efficient Market

A market in which all available information is fully and immediately reflected in asset prices, thus making it impossible to consistently achieve higher returns on investment than average market returns on a risk-adjusted basis.

Profit Opportunities

Situations where businesses can generate higher returns on investment than the market average.

Efficient Economy

An economy where resources are allocated in the most efficient way possible, maximizing the production of goods and services without wasting resources.