Zipcar, Inc., a world leading car sharing network, was founded in Cambridge, Massachusetts in 2000. At the end of 2011, the company’s operation already expanded to Florida and California. On October 29, 2012, one of the largest Atlantic hurricanes, Hurricane Sandy, came ashore in the U.S. and caused power outages, disruption of public transportation, and gas shortages from Virginia to New Hampshire. As a result of flooding and wind damage, Zipcar estimated $952,000 loss from Hurricane Sandy. For the fiscal year ending December 31, 2012, Zipcar reported an after-tax income $15,139,000, before considering the hurricane loss. Total revenues for the year was $278,868,000.Assume that you are the Zipcar controller. The chief financial officer of Zipcar has asked you to prepare a short report (1–2 pages) in memo form giving your recommendation as to the proper reporting of the hurricane damage costs in the income statement for the year ending December 31, 2012. Explain why your recommendation is appropriate. Be sure to include in your report any references to authoritative pronouncements that support your recommendation.
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