loss on theft

Dear Sir,

For VAT treatment u have to refer the relevant VAT Act & rules made thereunder.

Loss on account of Theft is an "Extra-ordinary item" in terms of AS-5 -

Extraordinary items should be disclosed in the statement of profit

and loss as a part of net profit or loss for the period. The nature and the

amount of each extraordinary item should be separately disclosed in the

statement of profit and loss in a manner that its impact on current profit

or loss can be perceived.

Eg -

 Profit from Ordinary Activities -  xxxx

Less: -Loss on account of Theft -  xxx

Profit before Taxes                    -  xxxx

(Next year the amount of Insurance claim received will be added in a same manner) 

Mr. Tripathi G

Firstly u have to book Loss on theft of goods.

Now when u claim insurance, what u expect that insurance claim received or not, if received then how much ?

As per AS 9 if u fulfil all formalities and certify  that insurance claim definetely received approxiamate 10,000/- then u have to book as income from insurance claim received.

When u have not certify then u have to better way book when actualy received.

For VAT computation is not effect in both cases because VAT not applicable on Insurance claim.

You need to pass two entries in this case :

1. remove cost of goods lost from trading A/c so as to arrive at normal GP

     Goods lost by fire A/c Dr.    XX

         To Trading / Purchase A/c    XX

2. Pass the entry for insurance claim receivable and balance loss

    Insurance claim receivable A/c Dr.      XX

    Loss by fire A/c Dr.                                  XX

      To Goods lost by fire A/c                              XX

At the end of the year, loss by fire will appear into P/L A/c as extraordinary item and insurance claim, not yet received, will be shown on the asset side of the balance sheet

Regards, CA Shakuntala Chhangani

friends, pl. read the above entries as loss by theft instead of loss by fire.

THANKS

If we pass entry in Tally What is the Head of account for Goods lost by fire A/c Dr?

Loss by fire A/c Dr. -   is Indirect expense. But Goods lost by fire A/c Dr is what is the Head ogf a/c in Tally?

Thanks

Goods lost by fire under the head purchases

It will be an indirect expenditure. direct expenses are those which relate to producing the goods.

Regards, CA Shakuntala Chhangani

I think the accounting entry should be- 1. Goods lost by theft Dr To Purchase

2. Insurance Claim Dr To Goods lost by fire.

here ins claim recivable shall be come in current asset and purchase will be reduced.