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Problem 1: An entity build a new factory building during the current year. Subsequent to the current year-end and before issuance of financial statements, the building was destroyed by fire and the claim against the insurance entity proved futile because the cause of the fire was negligence on the part of the caretaker of the building. What should be reported at the current year-end?
a. Write off the carrying amount of the building
b. Make a provision for one-half of the carrying amount of the building
c. Make a provision for three-fourths of the carrying amount of the building d, Disclose the non adjusting event in the notes to financial statements
Financial Statement Analysis and Preparation
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