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June 1, 2019
Question

Bought a new A/C for $5K for rental property to replace the old one that was destroyed. Insurance proceeds were $4K. Should the new A/C be capitalized at $5K or $1K?

  • June 1, 2019
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1 reply

June 1, 2019

You would create a new asset for the replacement unit with a cost equal to the difference between the total cost and the amount of the insurance reimbursement, so $1,000.00.