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Treatment of insurance claim received against fire loss
one of my client doing business of automobile. in last year he have incurred a loss of almost 6 lakhs due to fire. then this is Dr in P&L and claim entire loss as expenses. but now in current year claim has been received from insurance co. so my question is what should i do?? can i show this entire amount as income in current year??? Plz suggest me ASAP.
Replies (3)
Yes.. Since you have debited the entire amt of loss as expense the previous year you have no option left but to book the insurance claim received as income.
see Mr arun ji, since the loss of rs 6 lac by fire has been accounted as expense by ur client in the year of occurence, then the further, if any claim received on account of such fire shall be treated as an EXTRAORDINARY item, if such claim is received by ur client after the b/s date but before auditor's report then as per AS-4 its should be accounted as adjustible event from the loss, by deducting income from expense and the net shall be treated as loss from fire.
further, if such claim is lodged with the insurance compamy before the auditors report but claim is not yet received then should be shown in asset as insurance claim receivable in the year of loss.
hope this will help u
Harshit
+918955737073
further, if such claim is lodged with the insurance compamy before the auditors report but claim is not yet received then should be shown in asset as insurance claim receivable in the year of loss.
hope this will help u
Harshit
+918955737073
Thanx for valuable suggestion
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