One of Benjamins warehouses and its contents were destroyed by a fire on December 1. The warehouse had an acquisition cost of $1.2 million and accumulated depreciation through November 30 of $800,000. The estimated cost of replacing the warehouse is $1.7 million. The warehouse was insured, but the insurance proceeds have not yet been received. However, the insurer has assessed the damage and has agreed to cover 95% of the replacement cost of the warehouse, not to exceed $1.5 million. The insurance policy requires Benjamin to pay a $200,000 deductible

The inventory destroyed in the warehouse fire was recorded on the books at a cost of $750,000 (LIFO). Benjamin has estimated that $125,000 of the lost inventory was comprised of rare parts that are not replaceable. The insurer has agreed to pay Benjamin for the fair market value of all lost inventory in the amount of $870,000. Benjamin plans to replace the inventory that can be replaced upon receipt of the insurance proceeds. The proceeds are expected to be received in late January or early February.

What are the proper Journal entries and what are the proper FASB Accounting Standards Codifications proving why we are able to make said Journal Entry?