Insurance claim

are insurance claim is revenue or capital item?
Replies (5)
Quick Summary
This discussion clarifies whether an insurance claim is treated as a revenue or capital item. It explains that insurance is a capital guarantee product and its contracts don't fall under revenue recognition standards, making it a capital item. The thread also provides journal entries for recording stock loss and the subsequent insurance claim, detailing the accounting for the loss and the amount received.

Insurance is a capital guarantee product plus, insurance contracts do not fall under the scope of revenue recognition standard, so, adding all together, it is a capital item.

Kindly share the entry for loss of stock valued rs. 10000 and insurance claimed for rs .8000

Insurance a/c 

To Cash a/c

(purchased insurance)

Loss of goods a/c 10,000₹

To Asset a/c 10,000₹

(goods lost in fire)

Cash a/c 8,000₹

To Insurance claim 10,000₹

(claimed full insurance, but received only 8,000₹)

cash received on insurance claim.

and 

P&L a/c 2,000₹

To Loss a/c 2,000₹

(loss taken to income statement)

Here, I have used only final accounts entries. In reality, you have to account for different accounts: https://www.accounting-basics-for-students.com/what-is-the-journal-entry-for-an-insurance-claim1.H T M L

 

Forgot to mention, Bank and Cash are interchangeable. What ever the mode of payment, everyone uses it.

Record loss of stock and keep claim as other item in pl

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