On July 1, 2006, one of Rudd Co.’s delivery vans was destroyed in an accident. On that date, the van’s carrying value was $2,500. On July 15, 2006, Rudd received and recorded a $700 invoice for a new engine installed in the van in May 2006, and another $500 invoice for various repairs. In August, Rudd received $3,500 under its insurance policy on the van, which it plans to use to replace the van. What amount should Rudd report as gain (loss) on disposal of the van in its 2006 income statement?
- $1,000
- $ 300
- $0
- $ (200)