A Car has been stolen on 20 March, 2009.
Insurance claim is not yet submitted, only a few papers have been submitted upto the date of finalisation of accounts.
What effect of such a transaction should be given in the company's final A/cs on 31 March, 2009?
Fixed asset should be credited for sure. What should be the Debit effect?
Should a provision be created or loss should be recognised?
If provision for what amount & on what basis?
If to be debited to P & L A/c on what basis?
Dear,
Normal Treatment:
Debit for Lost Asset is anyway P & L only. The Amount shouls be recognised. And the Loss may be reduced by the amount by which the Insurance Company gives the claim.
In your Case:
Debit the Lost Car in P & L
You have to collect the details of Claim accepted by the Insurace Company and the credit should be given to the Lost Car in P & L
Dr. Insurance Co. ( with the amount of claim likely to be admissible)
Dr. P&L A/c ( with the inadmissible amount)
Cr. Car A/c
Lets suppose the gross block of the car was Rs. 100 and acc. dep including depreciation for the year till 20th March was Rs. 70 and you don't expect to recover not more than Rs. 10 from the insurance co, then the scheme of entry would be:-
Acc. Dep. .......Dr 70
Loss on F/A..... Dr. 20
Insurance Claim Receivable..... Dr. 10
to Fixed Asset. 100
CAclubindia
