[agripper]

On March 21, Year 2, a company with a calendar year-end issued its Year 1 financial statements. On February 28, Year 2, the company’s only manufacturing plant was severely damaged by a storm and had to be shut down. Total property losses were $10 million and determined to be material. The amount of business disruption losses is unknown. How should the impact of the storm be reflected in the company’s Year 1 financial statements?

A.

 

Provide no information related to the storm losses in the financial statements until losses and expenses become fully known

B.

 

Accrue and disclose the property loss with no accrual or disclosure of the business disruption loss

Correct

C.

 

Do not accrue the property loss or the business disruption loss, but disclose them in the notes to the financial statements

D.

 

Accrue and disclose the property loss and additional business disruption losses in the financial statements