Suppose a severe storm floods a company's headquarters,causing damages to the building of $300,000 and destruction of inventory of $200,000.Because of the unusual nature of this event,the company had no flood insurance to cover these losses.Under U.S.GAAP,how much would the company report as an extraordinary loss in the current year's income statement?

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Quizplus · Accepted Answer

Under U.S. GAAP, extraordinary losses are reported net of any related income tax effects. In this case, the company would report an extraordinary loss of $500,000 ($300,000 + $200,000).

Suppose a Severe Storm Floods a Company's Headquarters,causing Damages to the Building