One of your clients BC LLC bought an apartment complex on 01/01/2004. Total Cost of apartment including
Question:
One of your clients BC LLC bought an apartment complex on 01/01/2004. Total Cost of apartment including land was $8,726,210. Accumulated Depreciation as of 12/31/2017 was 4,513,597.
During 2017 Tornado hit the apartment complex and caused considerable damage. The US President declared Harris County as a disaster area in 2017. BC spent a considerable amount in cleaning asbestos removal in 2017. Half the units became inhabitable. BC returned the security deposits of the tenants and the tenants moved out. Only half of the units are rented out since July 1, 2017.
The insurance company so far has paid $2.5 million in 2017. The insurance company is coming back in 2018 to determine the amount of loss. BC does not know when the insurance company will settle the case.
Required:
How and when to report gain or loss from causality?
Expert Answer:
The gain or loss from casualty should be reported in the financial statements of BC LLC based on the guidance provided by the applicable accounting st... View the full answer
