Q:

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Accepted Solution

A:
Answer:A gain of $21,000Step-by-step explanation:Data Provided in the question;Original cost of the delivery truck = $84,000Accumulated Depreciation account amounted at the time of fire = $57,000Reimbursement received from its insurance company = $48,000Now,Book value of the truck at the time of fire = Original cost - Accumulated Depreciation= $84,000 - $57,000= $27,000Since, The amount received as the reimbursement from its insurance company is higher than the book value at the time of the fireThus, the fire will result in a gainThe amount of gain = Reimbursement received - Book value = $48,000 - $27,000= $21,000