Question

Bruin Company received a $100,000 insurance payment on the death of its company president. The company annually paid $1,000 of non-deductible insurance premiums on the policy. Bruin reported the insurance receipt as income and deducted the premium payments on its books. For ASC 740 purposes, the income and deduction are characterized as:

Answer 1

The description as per the given scenario is explained in the segment below.

Step-by-step explanation:

• The receipt of benefits would be a mandatory beneficial improvement as well as the premium charge seems to be a permanently undesirable distinction to be made.
• Besides ASC 740 considerations, the profits earned as initial deposit mostly on the dissolution of the organization's president as well as higher price loss on either the policy shall be defined as a permanent insurance gain as well as a constant unfavorable premium gap.