D is corrent. The destroyed building had a book value of $52,000 ($100,000 - $48,000). The cash settlement from the insurance company resulted in a loss of $21,000. Therefore, the cash inflow from this investing activity must be $31,000 as shown below. | Proceeds | − | Book value | = | Loss | | Proceeds | − | $52,000 | = | ($21,000) | | Proceeds | = | ($21,000) | + | $52,000 | | Proceeds | = | $31,000 | | |
A is incorrect. The destroyed building had a book value of $52,000 ($100,000 - $48,000). The cash settlement from the insurance company resulted in a loss of $21,000. Therefore, the cash inflow from this investing activity must be $31,000 as shown below. | Proceeds | − | Book value | = | Loss | | Proceeds | − | $52,000 | = | ($21,000) | | Proceeds | = | ($21,000) | + | $52,000 | | Proceeds | = | $31,000 | | |
B is incorrect. The destroyed building had a book value of $52,000 ($100,000 - $48,000). The cash settlement from the insurance company resulted in a loss of $21,000. Therefore, the cash inflow from this investing activity must be $31,000 as shown below. | Proceeds | − | Book value | = | Loss | | Proceeds | − | $52,000 | = | ($21,000) | | Proceeds | = | ($21,000) | + | $52,000 | | Proceeds | = | $31,000 | | |
C is incorrect. The destroyed building had a book value of $52,000 ($100,000 - $48,000). The cash settlement from the insurance company resulted in a loss of $21,000. Therefore, the cash inflow from this investing activity must be $31,000 as shown below. | Proceeds | − | Book value | = | Loss | | Proceeds | − | $52,000 | = | ($21,000) | | Proceeds | = | ($21,000) | + | $52,000 | | Proceeds | = | $31,000 | | |
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