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Chapter 4 — Loss Recoveries

4.2 Involuntary Conversions

4.2 Involuntary Conversions

Insurance is often maintained to mitigate losses in the event of property damage or casualty losses. The recognized loss and the associated recovery proceeds (through insurance proceeds or other sources of recovery) are treated as two separate events and therefore two separate units of account. The principle underlying this separation, which is the basis for the accounting models described in Sections 4.3 and 4.4, is derived from the involuntary conversion guidance codified in ASC 610-30.