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What amount should toni inc recognize as gain on insurance

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Toni 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.

Question a. For the year 2024, what amount should be recognized as interest expense?

Question b. What amount should Toni Inc. recognize as gain on insurance settlement?

Reference no: EM132839578

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