Question
ABC Company built a new factory building during 20X5 at a cost of $ 20 million. As of December 31, 20X5, the net book value
ABC Company built a new factory building during 20X5 at a cost of $ 20 million. As of December 31, 20X5, the net book value of the building was $ 19 million. After the end of the year, on March 15, 20X6, the building caught fire and the claim against the insurance company was in vain because the cause of the fire was the negligence of the building caretaker. If the financial statement approval date for the year ending December 31, 20X5, is March 31, 20x6, the company must.... A. Remove the net book value of the residual value because the insurance claim will not provide any reimbursement. B. Make a provision equal to half the net book value of the building. C. Make a provision of three quarters of the net book value of a building based on the precautionary principle D. Disclose this event in the notes to the Financial Statements.
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