Insurance payout

Dottie

Hi

How do I show an insurance payout in the accounts? A client received a payout last year for flood damage to stock and equipment?

Many thanks in advance!

Dottie

welshwizard

In P&L as 'Other Income' after operating profit?

Bluewednesday

I wouldn't.

I may be controversial here but what I do is net it off the expense code. If it is used to pay for stock I credit the purchases account. Otherwise the stock is there originally and then the replacement stock is there again - effectively double counting.

For the equipment I would credit the equipment account and then add the new equipment.

DaveP

Slightly different for me too!

I would treat the payout in relation to assets as proceeds of sale and create a fixed asset disposals account as normal.

Bluewednesday

Sorry Dave, that is really what I would do as well, just didn't want to get into the realms of balancing allowances and disposal accounts. Glad you agree with other treatment!

Wasn't very clear about what I meant really ;-)

Dottie

Thanks. I had thought part of it should be shown as disposal proceeds re the fixed assets.

Much appreciated!

Dottie

T.C.

I would enter as a sale to the insurance company!

Baggybooks

Why?