Why this is mistaken
Corrective approach
Put each event on its own dated row. Use ASC 610-30-25-2 for the monetary-conversion rule. If the recovery is not determinable, follow the Topic 450 direction in ASC 610-30-25-4. Recognize any supported conversion gain or loss even when the proceeds will fund a replacement. Measure the new asset from its own transaction under ASC 610-30-30-1.
Where to watch
When this mistake may appear
- Insurance or condemnation proceeds will be spent on a similar replacement asset.
Check your work
Your work may contain this mistake if:
- Carries the destroyed asset until the replacement is bought.
- Nets an unsettled policy limit against the asset loss.
- Uses the old asset's basis as the replacement asset's book cost.