Green Valley (GV) Sporting Goods is a retailer specializing in the sale of camping, hiking and fishing
Question:
Green Valley (GV) Sporting Goods is a retailer specializing in the sale of camping, hiking and fishing equipment. GV’s flagship store (means its main store) is located in Moore, OK, a suburb of Oklahoma City. However, GV also has two smaller stores located in Wichita, KS and Springfield, MO. During the current year, a tornado destroyed the Moore store completely leveling the building and destroying all the content of the building. The building had a cost basis to GV of $6 million and a fair value of $11 million at the time of the tornado. The contents of the building (except for the inventory) had a cost basis of $2 million and a fair value of $0.5 million at the time of the tornado. Finally, the inventory destroyed from the tornado had a cost basis of $1.2 million and a fair value of $1.8 million. The buildings and contents of the other GV stores were undamaged. The insurance company paid to have the Moore building rebuilt which cost the insurance company $12 million. The insurance company also paid $700,000 in cash for the contents of the building and $1.9 million for the inventory.
What is the basis in the building to GV after it was rebuilt?
Multiple Choice
$6 million
$11 million
$12 million
None of the above
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott