What is the correct accounting entry of general insurance proceeds for repairs of hospital equipments-
1) Insurance claim receivable a/c (Asse) Dr
to Repairs of equipments (Expense) a/c
2) Bank a/c Dr.
to insurance claim receivable
Or should it to adjusted to Fixed asset / is insurance receipts taxable as income for company since insurance premium is accounted as expense.
Accounting treatment : The hospital equipments must be de-recognized from the balance sheet and a loss must be recognized for the carrying amount of the lost or stolen asset.
Insurance compensation received or receivable on the asset may either be offset against the loss or presented separately as other income.
The accounting entries may therefore be summarized as follows:
Loss on assets a/c...dr (indirect expenses)
Accumalated depreciation a/c....dr
To Hospital equipments (asset) a/c.
Bank a/c......dr
To Insurance claim a/c...(Other income )
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