On June 30, 2011, a Fire in Oak Company's Plant

Multiple Choice

On June 30, 2011, a fire in Oak Company's plant caused the total loss of a production machine. The machine was being depreciated at $20,000 annually and had a carrying amount of $160,000 at December 31, 2010. On the date of the fire, the fair value of the machine was $220,000, and Pine received insurance proceeds of $200,000 in October 2011. In its income statement for the year ended December 31, 2011, what amount should Oak recognize as a gain or loss on disposition?

A) $0
B) $20,000 loss
C) $40,000 gain
D) $50,000 gain