Insurance claim received
This query is : Resolved
CA SINCY SAJI
(Querist)
10 July 2012
Sir,
In a Hospital (Proprietory), a plant and machinery damaged.
The Company from which the plant & machinery purchased offered discount while they again purchased a new asset.
The damaged asset was insured and insurance claim recovered from insurance company.
While preparing final accounts we shown both the amounts (ie. discount given by company and insurance claim received) as deletion from asset.
Is it correct??
Is it allowable in IT?
Or shall we treat insurance claim as revenue?
In a Hospital (Proprietory), a plant and machinery damaged.
The Company from which the plant & machinery purchased offered discount while they again purchased a new asset.
The damaged asset was insured and insurance claim recovered from insurance company.
While preparing final accounts we shown both the amounts (ie. discount given by company and insurance claim received) as deletion from asset.
Is it correct??
Is it allowable in IT?
Or shall we treat insurance claim as revenue?
CA PARAS BAFNA
(Expert)
10 July 2012
You may take the New Machinery at Net Price i.e. Original Price Less Discount allowed.
.
Credit the Insurance Claim A/c to Old Machinery A/c.
.
As the capacity of machine has been drastically????? reduced, you can reduce the value of asset, and claim the depreciation of Block on such reduced ( Discount & Claim) value.
.
Where New Machinery has been used for less than 180 Days claim Depreciation on it at Half of the Applicable Rate.
.
.
Credit the Insurance Claim A/c to Old Machinery A/c.
.
As the capacity of machine has been drastically????? reduced, you can reduce the value of asset, and claim the depreciation of Block on such reduced ( Discount & Claim) value.
.
Where New Machinery has been used for less than 180 Days claim Depreciation on it at Half of the Applicable Rate.
.
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