A building costing $418,000 on which $220,000 of depreciation had been accumulated and a machine costing...
A building costing $418,000 on which $220,000 of depreciation had been accumulated and a machine costing $132,000 on which $88,000 depreciation had been accumulated were completely destroyed by fire. Both assets were partially insured, and $198,000 is expected to be recovered from the insurance company. The total amount of the fire loss to be recorded by the company is:
Homework Answers
Cost of Building = $418,000
Accumulated Depreciation-Building = $220,000
Book Value of Building = Cost of Building - Accumulated
Depreciation-Building
Book Value of Building = $418,000 - $220,000
Book Value of Building = $198,000
Cost of Equipment = $132,000
Accumulated Depreciation-Equipment = $88,000
Book Value of Equipment = Cost of Equipment - Accumulated
Depreciation-Equipment
Book Value of Equipment = $132,000 - $88,000
Book Value of Equipment = $44,000
Book Value of Assets destroyed = Book Value of Building + Book
Value of Equipment
Book Value of Assets destroyed = $198,000 + $44,000
Book Value of Assets destroyed = $242,000
Amount Recovered through Insurance Company = $198,000
Loss by Fire = Book Value of Assets destroyed - Amount Recovered
through Insurance Company
Loss by Fire = $242,000 - $198,000
Loss by Fire = $44,000
The total amount of the fire loss to be recorded by the company is $44,000
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