An amt of say 70 lacs is paid to insurer on account of group mediclaim policy for employees, out of which Rs 25 lacs are recovered from employees as deduction from salary. Policy period is 1-10-2015 to 30-09-2016. Should the additional amt of 45 lacs be charged to profit and loss account of current 2015-16 completely or prepaid ins should be calculated ??
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Insurance premium paid for employees
Replies (3)
You have to bifurcate.
Prepaid insurance payment needs to be recognised in the financial statements.
I THINK
YOU SHOULD DO AS
NET INSURANCE PAYMENT =70 LAC -25 LAC=45 LAC
1. DEBIT TO INSURANCE EXPENSES A/C =(45/365X NOS OF DAYS (DATE FROM 1.10.2015 TO 31.3.16))
2. DEBIT TO PERPAID EXPENSES A/C =(45/365* NOS OF DAYS (DATE FROM 1.4.16 TO 30.9.2016))
THANKS
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