Insurance Claim

Issue

TTI rents a warehouse. Back in November 2019, TTI experienced flood damage in the warehouse caused by a water heater leak. According to the terms of TTI's lease, TTI is responsible to ensure the damage is repaired such that the building is restored to its original condition. The remediation company hired has estimated the cost to be $200,000. Unfortunately, TTI was underinsured. Accordingly, the insurer has advised that only 75% of the repair costs will be reimbursed, less a $10,000 deductible. Nothing has been recorded in the financial statements

QUESTION

Identify the ISSUE AND please provide the FINANCIAL ACCOUNTING ANALYSIS under ASPE