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Accounting Treatment - Loss of fixed Asset by fire

Seior Financial Analyst

Hi would kindly request someone to detail me the accounting treatment for loss of substantial part or full fixed asset by fire.?

Also kindly let me know the treatment if insurance is claimed not yet received.

is such insurance claim a contingent Asset?

 

Thanks and regards

 
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Loss by fire A/c Dr

To Fixed assets A/c

 

and

Insurance co A/c Dr. (with amount of claim accepted)

To Loss By fire

 

And balance figure of Loss by fire A/c tran. to P&L A/c

 
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suppose ur Fixed asset is wirth RS. 5000 &  u get d claim of RS. 2000

then A/C entry wud b :

Bank/Insurance claim receivable Dr 2000

Loss by fire Dr                                        3000

             To Asset A/c                                            5000


Total thanks : 1 times

 
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senior articled assistant

AGREE WITH MANAVSI

 
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article assistant


yes agree with manavsi

 
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i m not agree with Manavsi, coz date of loss and date of claim can't be same (varification from insurance company take 2-3 days)

 
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article assistant


insurance claim is not contingent asset

 
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Hi Payal

i never say it's contingent.

i m saying only that generally date to loss and date of accept the claim by insurance company is differ that's why entry is done at two different pt. of time

 
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What if Claim recieved is more than the value of Depreciable Asset?

For Example: Book Value of Asset in the books of the company Rs. 40000.00; Claim Recieved Rs. 55000.00 and WDV as per Income tax Act Rs. 35000.00. What will be the entry in the books and treatment for income Tax Purpose?

 

 
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and we have been providing for Deffered Tax liability for the Diffrence in WDV as per Income Tax Act and WDV as per Companies Act. Shoud the Deffered tax Liability provided for in Previous Years  be Reversed?

 
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