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What amount should be recognized as interest expense

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Tayna Inc. insured the life of the president $2,000,000, the entity being the beneficiary of an ordinary life policy. The annual premium is $60,000. The policy was dated January 1, 2020 and carried the following cash surrender value:

End of policy year        Cash surrender value
2020                             -
2021                                -
2022                                    60,000
2023                                  84,000
2024                                116,000

The entity followed the calendar year as the accounting period. The president died on June 30, 2024 and the policy was collected on July 31, 2024.

Problem 1: For the year 2024, what amount should be recognized as interest expense?

Problem 2: What amount should Tayna Inc. recognize as gain on insurance settlement?

Reference no: EM132839627

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