Dear All,
We have purchased the vehicle in 2011 for an amount of 800000, and the depreciation provided till 2019-20 is 620000, Net block value is 180000, ? Major fire accident occured in July, Insurance claim received against Car is 320000, please give me the all accounting entries related to these transactions, following entries i have to
post as of i know, please correct me if i am wron
g.
Purchase Entry
Vehicle A/C Dr 800000
To Cash & Bank A/C 800000
For So far Provided Depreciation
Depreciation A/C Dr 620000
To Accumulated Depreciation A/C 620000
Entry on Claim Receipt
Cash & Bank A/C Dr 320000
Accumulated Depreciation A/C Dr 620000
To VehicleA/C 800000
To Profit on Loss of Fire 140000
Plz Suggest if i am wrong.
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Insurance claim received under car Insurance
Replies (3)
Quick Summary
In the vehicle account, the depreciation will reduce the NBV. So, I'm doubtful about the 8,00,000 because in the subsequent years, if you want to sell the asset, it will be valued at cost less accumulated depreciation less impairment.
These are the easiest journal entries that I ever came across. You can follow them by changing inventory name to Car. The treatment is the same.
| Account | Debit | Credit |
|---|---|---|
| Impairment of inventory (expense) | XXX | |
| Inventory | XXX |
| Account | Debit | Credit |
|---|---|---|
| Accounts receivable | XXX | |
| Insurance compensation (income) | XXX |
| Account | Debit | Credit |
|---|---|---|
| Cash | XXX | |
| Accounts receivable | XXX |
I hope you got the first entry
Impairment of asset
To Asset a/c
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