LIC Policy

This query is : Resolved

Harrshal M Dakle (Querist)
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17 June 2010 Respected Freinds,

I am an accountant of a individual having business. My client has taken out 20 different LIC policies for which an annula premium of Rs. 200000 is being paid every year. 1) Can i show the premium paid on the asset side of the balance sheet policy wise thereby strenthning my balance sheet instead of debiting it to Capital Account?
2)Also since i have maintained business books and personal books seperately, where will the effect of such transaction come. Payment is made out of business funds.

ajay taneja

ajay taneja (Expert)
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17 June 2010 Debit Rs.200000/- in capital account as drawings (in business books) and credit the same in personal books in investment in firm and show amount of premium paid as investment in LIC Policies in assets side (in personal books)

CA Pradeep Kumar Rajput

CA Pradeep Kumar Rajput (Expert)
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18 June 2010 premium paid out of business fund is the Drewing debit in capital account.....

premium paid can not be shown on the asset side of the Balace sheet:

In india Life insurance Policy Consist of two parts i.e. Insurance Risk portion and investment portion.....

Only investment portion i.e. Surrender value of the Policy can be shown in the asset side of the Balance Sheet....

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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18 June 2010 Agreed with experts.

If the person has maintained business book and personal book seprately. It is better to shown LIC in book of balance sheet of Personal book.

In books of Business , Premium is treated as drawing.