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Good evening Mr John..
The question is you gave an example on non-adjusting such as building destroyed by fire which has cost $1m causing Insurance pay for 500.000…What about the other sum?
So did you mean now the same building cost 500.000?
I am confused a little bit…It might be adjusted because it is losing its half of the value?Or you mean , the damage only cost 500.000
Thank you..
How much the damage cost, and how much it originally cost, is of no relevance as all.
A note is required stating what has happened and the financial consequences – so we would say that it had been destroyed, we would state what its net book value had been, and we would state the amount of insurance that we expect to receive.
Alright..But the question is why?
Why dont we just adjust it like we do for inventory?Thanks Mr John..I really appreciate it..
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