The following information pertains to a fire insurance policy in effect at December 31, 2020, covering...
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The following information pertains to a fire insurance policy in effect at December 31, 2020, covering Aspen Company's inventory: Face amount of policy $400,000 Deductible per claim 25,000 Amount of annual premium 2,000 Aspen's inventory averages $500,000 uniformly throughout the year. Aspen's income tax rate is 25%. How much of a contingent liability should Aspen accrue at December 31, 2020, to cover possible future fire losses? OA) $-0- B) $18,75 C) $23,000 OD) $75,000 The following information pertains to a fire insurance policy in effect at December 31, 2020, covering Aspen Company's inventory: Face amount of policy $400,000 Deductible per claim 25,000 Amount of annual premium 2,000 Aspen's inventory averages $500,000 uniformly throughout the year. Aspen's income tax rate is 25%. How much of a contingent liability should Aspen accrue at December 31, 2020, to cover possible future fire losses? OA) $-0- B) $18,75 C) $23,000 OD) $75,000
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Answer A 0 Explanation Contingent liabilities are recognised only wh... View the full answer
Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Posted Date:
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