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

Answer rating: 100% (QA)

Answer A 0 Explanation Contingent liabilities are recognised only wh... View the full answer