P8-38 Derecognition

Taya Ltd. purchased equipment in February 2016 for $200,000. At the time of purchase it was estimated that the equipment would have a useful life of four years with no residual value. In September 2018, the equipment was destroyed in a flood. In February 2019, Taya Ltd. received an insurance settlement of $101,500. The company depreciates all equipment on a straight-line basis. Its policy is to record a full month of depreciation in all months that assets are available for use.

Required

Prepare the journal entry to record the derecognition of the asset.