On April 1, 2004 Riverside Construction Company, (RCC) received a condemnation a
ID: 2426954 • Letter: O
Question
On April 1, 2004 Riverside Construction Company, (RCC) received a condemnation award of $590,000 cash as compensation for the forced sale of land and building that stood in the path of a new highway. The original cost of land and building were $60,000 and $400,000, respectively. The company recognized a gain of $250,000 on disposal of plant and assets. The accumulated deprectiation related to the building is (Show all your work)
a. $160,000
b. $120,000
c. Can not be determined from information given
d. None of the above
Explanation / Answer
The Original Cost of the Land and Building is $460,000
Company received $590,000 and recognised gain of $250,000. Hence the Net cost of the Land & Building must be $590,000-250,000=$340,000
Accumulated depreciation=Original Cost-Net cost on disposal
=$460,000-340,000
=$120,000
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