Assume the Finch family of Charlotte, North Carolina, purchased their home in 1966 for $50,000. Since then,
Question:
Assume the Finch family of Charlotte, North Carolina, purchased their home in 1966 for $50,000. Since then, comparable homes in their neighborhood have most recently sold for $150,000. The cost to replace the home would be $169,500. It is estimated that the house is one third (1/3) depreciated. The Finch’s have a $135,600 (Coverage A) Homeowners policy in force, similar to the policy shown in the Appendix. Answer the following questions as if each question were a separate event. (Assume no deductible)
1) How much will the Finch’s collect for a total covered fire loss under coverage A?
2) How much will be collected for a $20,000 partial loss under coverage A?
3) What would be your answer to questions 1 above if the Finch’s had only $101,700 of insurance for Coverage A?
4) What would be your answers to question 2 above if the Finch’s had only $101,700 of insurance for Coverage A?
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young