Question
Ocean Corp.s comprehensive insurance policy allows its assets to be replaced at their current value. The policy has a $50,000 deductible clause. One of Oceans
Ocean Corp.’s comprehensive insurance policy allows its assets to be replaced at their current value. The policy has a $50,000 deductible clause. One of Ocean’s waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of costs in dismantling the warehouse and plans to replace it. The tax rate is 30%. The following data relate to the warehouse:
Current carrying amount $ 300,000
Replacement cost 1,100,000
What amount of gain should Ocean report as a separate component of income before extraordinary items?
A. $1,030,000
B. $780,000
C. $730,000
D. $0
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
15th edition
978-1118159644, 9781118562185, 1118159640, 1118147294, 978-1118147290
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