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FASB Codification Case #6
Statement of Cash Flow
Reporting Insurance Proceeds
Facts
On June 1, YR01 a tornado completely destroyed a storage warehouse owned by Target Inc. The
warehouse had a cost basis of $1,000 and accumulated depreciation of $400. Insurance proceeds
of $1,200 were received from Targets insurance company.
Question
Should the $1,200 of cash proceeds from the insurance policy be reported on Targets statement
of cash flow? If so, how?
Required
1. With respect to the statement of cash flow, provide a brief written description of the proper
reporting of the $1,200 cash received from insurance.
2. Identify the specific paragraph of the FASB Codification which addresses this issue and
submit a printout of this paragraph with your solution.
Grade Value
This case counts as a bonus question (maximum 2 percentage points) for examination #3.
You must work independently on this case (this is not a group project).
Answer & Explanation
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