[jessanqi]

Hi,

This is from the AICPA sample question for 2017.

On october 15 year 3, one of rev’s facilities sustained significant water damage. at your request, we contacted the property insurance carrier to check the status of the $2500,000 claim that rev filed on November 15, year 3. On december 27 year 3, the property insurance carrier acknowledged that the losses appear to be covered by the insurance policy. however, the property insurance carrier stated that its adjuster is still reviewing the claim and does not expect to settle it until March, year 4. the property insurance carrier further indicated that any payment is subject to the $235,000 deductible included in the property insurance policy.

The answer is disclosed on FS year 3, the assets/liability balance as of dec 31 year 3 is $0.

Can anyone advise?? why don’t accrue the $125,000 deductible amount??

Thank you!!!

[jessanqi]

THE DEDUCTIBLE amount is $125,000. sorry for the typo.

[Author]

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