Ocean Corp.’s comprehensive insurance policy allows its assets to be replaced at current value. The policy has a $50,000 deductible clause. One of Ocean’s waterfront warehouses was destroyed in a winter storm. Such storms occur approximately every four years. Ocean incurred $20,000 of costs in dismantling the warehouse and plans to replace it. The following data relate to the warehouse:
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|
Current carrying amount |
$ 300,000 |
|
Replacement cost |
1,100,000 |
What amount of gain should Ocean report as a separate component of income before extraordinary items?
- $1,030,000
- $ 780,000
- $ 730,000
- $0