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In March 2016, Finlay bought a painting for £75,000. In November 2021 it was damaged by smoke in a fire. In December 2021 it was valued at £60,000 and Finlay received compensation from the insurance company of £20,000 for the damage. Finlay spent none of the money on restoration.
What is the chargeable gain or allowable loss arising on the receipt of the compensation?
The answer is 1250 Gain but I am not able to understand how. Could you please help me out.
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