Tornado Costs

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The tornado that tore through Joplin, Missouri about a year ago ranks not only as the most deadly twister in six decades, but now has been declared the most costly since at least 1950.

Questions:

1. What percentage of the costs are insurance policies expected to cover and what percentage will likely be covered by federal and state government aid?

2. If a business had a piece of equipment (original cost $50,000 with accumulated depreciation of $20,000 and a fair value of $25,000), which was totally destroyed in the tornado but was insured for the fair value subject to a $500 deductible, what journal entry would it make to record the loss and receipt of insurance reimbursement?

3. Approximately how much money (in dollars) went toward contractors to haul off debris?

4. What costs mentioned in the article surprised you most? Explain.

Sources:

CNN Video (2012). After Tornado Joplin HS Moves to to Mall, May 21 (Retrievable online at www.cnn.com/videos)

Lieb, D. (2012). Records: Joplin Twister Was Costliest Since 1950. Insurance Journal, May 21 (Retrievable online at http://www.insurancejournal.com/news/midwest/2012/05/21/248250.htm)