Choice "C" is correct. Since the carrying value of the damaged portion of the building is known and is uninsured, the component method is used and a loss in the amount of the carrying value of the damaged portion of the building must be recognized. The refurbishing costs create a new asset (the reconstructed building) and must be capitalized.
Choice "b" is incorrect. Accumulated depreciation would be reduced if the refurbishing costs were material subsequent costs to acquisition of the asset and the refurbishment would extend the life of the asset.
Choice "d" is incorrect. Since the carrying value of the damaged portion of the building is known and is uninsured, a loss in the amount of the carrying value of the damaged portion of the building must be recognized. The costs of refurbishing are capitalized.
Choice "a" is incorrect. A loss in the amount of the carrying value of the damaged portion of the building must be recognized.