21 September 2008
Dear experts, example we have a machinery a cost of rs. 10lacs had lossed in fire and this machinery was insured. what entry we will provide in profit & loss a/c once for loss in fire and one when we will be receiving a claim from insurance company
22 September 2008
The machinery account will be closed by transfering it to loss on destruction of machinery account. Any insurance claim received will be credited to that account and the net loss transferred to the profit and loss account.
22 September 2008
In case your query is in the context of a company, the claim lodged should be adjusted as the value realised against that asset and the balance whether loss or profit is to be adjusted to P & L a/c. For Income Tax the claim is adjustable in the block and no other adjustment is required.
In case of other persons, the claim may be adjusted in the block only as the depreciation is calculated and fixed assets are accounted for as per the requirements and rates of Income Tax only.
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