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Insurance claim accounting

21 April 2016

How Insurance Claim should be accounting if lodgement and Receipt are in 2 different Financial Years. For Example: Assets worth WDV of Rs 100 are damaged with zero realisable value in FY 2015-16. Insurance company agrees to settle losses but the payment was done in FY 2016-17. Can Insurance claim be accounted on accrual basis in FY 2015-16?

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Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (5175 Points)
Replied 05 May 2016

Journal entry in the financial year 2015-16

Debit Insurance company and credit insurance claim receible

Jounal enry in the financial year 2016-17

Debit bank a/c and credit insurance co.

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C.M.A SHANKAR JAYAN (Probationary Officer at South Indian Bank) (140 Points)
Replied 06 May 2016

journal entrie inF.Y 2015-16 should only be made if there is reasonable certainty for the reciept of sum and also the quantum of the sum. if these data are not available i would prefer not to make a provision for F.Y 2015-16 rather i will consider this as a prior period item in F.Y 2016-17. if there is reasonable certainty then only i will make entries in F.Y 2015-16