USA Property Loss from Fire

[barb2]

What is the journal entry for a property loss from fire? How do I account for the insurance money received and the replacement of the property? In my many years of accounting, I have only experienced a Gain/Loss on the Sale of an Asset and have not had a loss due to fire.

Your help will be appreciated.

 

[bklynboy]

You should recognize a loss for the difference between the book basis of the property and the insurance proceeds received (assuming the proceeds are probable to be received). If this is material, you can consider recognizing as an extraordinary loss separate on the financial statements (this would be net of tax). The new property purchased would gave a new cost basis at whatever you spent to purchase and would depreciate as usual and not netted against the loss from the fire. The attached link gives the US GAAP guidance:

http://www.aicpa.org/interestareas/frc/downloadabledocuments/hurricanerelief/tis_section_5400.pdf

Hope this helps.