A company had a piece of equipment destroyed by a tornado. The equipment originally cost $85,000...

A company had a piece of equipment destroyed by a tornado. The equipment originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. Should the company recognize a gain or a loss and for what amount?

Expert Solution

Book value of the equipment = 85000-60000 =	25000
Loss on destruction = 25000-20000 =	5000
The company should recognize a loss of $5000

ekkarill92 answered 2 years ago

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