Early in the Year, Marlon Was in an Automobile Accident

question 37

Multiple Choice

Early in the year, Marlon was in an automobile accident during the course of his employment. As a result of the physical injuries he sustained, he received the following payments during the year: $\begin{array} { l } \text { Reimbursement of medical expenses Marlon paid by a medical}\\ \text {insurance policy he purchased }&\$10,000\\ \text {Damage settlement to replace his lost salary }&15,000\\\end{array}$
What is the amount that Marlon must include in gross income for the current year?

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Definitions:

Journal Entries

Records of financial transactions in the accounting system.

Impairment Loss

The amount by which the carrying amount of an asset exceeds its recoverable amount, leading to a decrease in the asset's value on the financial statements.

International Financial Reporting Standards

A set of global accounting standards developed by the International Accounting Standards Board, aiming to bring transparency, accountability, and efficiency to financial markets around the world.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control those policies, typically evidenced by ownership of 20% to 50% of the voting stock.