Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following transactions is Bravo supposed to record?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated
depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following
transactions is Bravo supposed to record?
Select the single best answer:
A debit Cash $45,000 credit Equipment/Furnace $45,000
B. debit Cash $40,000, debit Equipment/Furnace $40,000
C credit Gain on Disposition of Equipment/Furnace $45,000, debit Cash $45,000
D. debit Equipment/Furnace $5,000 credit Equipment/Furnace $40.000, debit Cash $45,000
E credit Gain on Disposition of Equipment/Furnace $5,000 credit Equipment/Furnace $40,000; debit Cash $45.000
Transcribed Image Text:Bravo Company's furnace, which has a current book value of $40,000 (original cost less than accumulated depreciation), has been destroyed. If the insurance company pays Bravo $45,000, which of the following transactions is Bravo supposed to record? Select the single best answer: A debit Cash $45,000 credit Equipment/Furnace $45,000 B. debit Cash $40,000, debit Equipment/Furnace $40,000 C credit Gain on Disposition of Equipment/Furnace $45,000, debit Cash $45,000 D. debit Equipment/Furnace $5,000 credit Equipment/Furnace $40.000, debit Cash $45,000 E credit Gain on Disposition of Equipment/Furnace $5,000 credit Equipment/Furnace $40,000; debit Cash $45.000
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Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation
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