On January 3, 2025, Elephant Corp. owned a machine that had cost $400,000. The accumulated depreciation...

Transcribed Image Text:

On January 3, 2025, Elephant Corp. owned a machine that had cost $400,000. The accumulated depreciation was $240,000, estimated salvage value was $24,000, and fair value was $640,000. On January 4, 2025, this machine was irreparably damaged by Rhino Corp. and became worthless. In October 2025, a court awarded damages of $480,000 against Rhino in favor of Elephant. At December 31, 2025, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Elephant's attorney, Rhino's appeal will be denied. At December 31, 2025, what amount should Elephant accrue for this gain contingency? On January 3, 2025, Elephant Corp. owned a machine that had cost $400,000. The accumulated depreciation was $240,000, estimated salvage value was $24,000, and fair value was $640,000. On January 4, 2025, this machine was irreparably damaged by Rhino Corp. and became worthless. In October 2025, a court awarded damages of $480,000 against Rhino in favor of Elephant. At December 31, 2025, the final outcome of this case was awaiting appeal and was, therefore, uncertain. However, in the opinion of Elephant's attorney, Rhino's appeal will be denied. At December 31, 2025, what amount should Elephant accrue for this gain contingency?

Answer rating: 100% (QA)

Answer To accrue for the gain contingency related to the damages awarded against Rhino Corp ... View the full answer