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bloodbrothers524
Oct 27, 2007, 04:39 PM
Hey, i just had a quick question

If a company purchases a machine for $178k (useful life 6 years, $14,000 salvage value) and it's destroyed in a fire at the end of the 5th year, if the insurance company then pays $30,000 to settle the loss, what would the journal entry/entries look like? I was thinking somewhere along the lines of having the acc. depreciation and the cost being equal since the book value might be 0?? and having a second entry for the insurance claim? not sure if that's the right line of thinking though...

Thanks
bloodbrothers524
Oct 27, 2007, 04:56 PM
Hey, i just had a quick question

If a company purchases a machine for $178k (useful life 6 years, $14,000 salvage value) and it's destroyed in a fire at the end of the 5th year, if the insurance company then pays $30,000 to settle the loss, what would the journal entry/entries look like? I was thinking somewhere along the lines of having the acc. depreciation and the cost being equal since the book value might be 0?? and having a second entry for the insurance claim? not sure if that's the right line of thinking though...

Thanks
Nevermind the question, I was missing the $4000 that came from installation and preparation costs.