Insurance compensation received what is the treatment ???

jignesh l bhatia (CA) (78 Points)

03 December 2011  

Hey Can anyone help me on this Matter???

 

My client is having a plant in the hilly areas of Sikkim.Due to the earfth quake in the Sep 11 the plant & its machineries were affected.For this the client has incurred additional repairs & maintainance expenses.

Also my client is possessing an insurance cover to meet that repair & maintainence cost.Now @ the time of incurring expense it was booked inot the P&L.

Now the query is whether the compensation recd from insurance companeies should be shown seprately on "Cr" of p&: or whether it should be shown as deduction from the specific expense incurred for repairing & maintainence of the P&L A/c.

Please reply

Thanks in advanc