Insurance Claim Receivable

This query is : Resolved

bankim (Querist)
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27 June 2011 A company incurred loss due to storm. The company incurred expenses on repair and maint. The company passed the entry as repair a/c Dr To Cash A/c. The company filed an insurance claim after few days with insurance company. On that day the company passed the entry Insurance Claim Receivable A/c dr To Repair & Maint. As on 31-3 Insurance Claim was shown as Current Asset. The company has not yet received any correspondence from Insurance company even though eight months have passed. Is the accounting treatment given by company correct. Or should the company book the loss and on receipt of claim show it as income.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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27 June 2011 If the company has lodged the claim with the Insurance Company as per the Terms of the Insurance Policy then they have to pass the entry as the company is maintaining books on Mercantile system. If the company is maintaining books on cash system then at the time of receipt of the the claim the entry can be passed.

bankim

bankim (Querist)
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28 June 2011 But sir the compnay has so far not received any communication from the insurance company though eight months have elapsed. Also how do we quantify the Claim receivable. The company is maintaining books as per mercantile system. Thanks in anticipation

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C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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28 June 2011 Go the the insurance company take the status