On June 30,2014,a Fire in Walnut Company's Plant Caused the Total

question 72

Multiple Choice

On June 30,2014,a fire in Walnut Company's plant caused the total loss of a production machine.The machine was being depreciated at $20,000 annually and had a carrying amount of $160,000 at December 31,2013.On the date of the fire,the fair value of the machine was $220,000,and Walnut received insurance proceeds of $200,000 in October 2014.In its income statement for the year ended December 31,2014,what amount should Walnut recognize as a gain or loss on disposition?

• A) $0
• B) $20,000 loss
• C) $40,000 gain
• D) $50,000 gain

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