Question

Y corporation manufactures hand tools. On 12/15/X7 it pays
$360,000 for liability insurance to Z corporation. Z will insure Y
for all liabilities for the 20X6, 20X7 and 20X8 years. However, Y
must pay a $10,000 deductible for each claim. For 20X7, Y pays $100,000 for the
deductible portion, and Z pays $1,500,000 in claims. When may Y
deduct these amounts?

Answer 1

Y incoprporation should record the amout received( $1500000) from Z after net of deductibe amount( $100000) 1.e $1400000 in the books