Received compensation - how to do the journal for this trasaction

siawfui

Hi

our company have purchased the new car for 36,000 inclusive VAT from the car factory, during the delivery, the transporter has crashed our car, car has been write off, transport company paid us the compensation for 39,250, no VAT element involve for the compensation, am I right?

can anyone tell me how to do the journal on Sage.

We have make a profit of 3,250 for the compensation, what is the journal for this.

Please help!

deanshepherd

Credit Other income?

wannabebean

I would imagine that this would be a GAIN ON DISPOSAL

deanshepherd

That was my initial thought but if they never took delivery of the car in the first place then I wouldn't put it through the fixed asset accounts.

wannabebean

Hmmm

It depends then on who owns the car - or who owned it when it had it's mishap. If you never owned the car or took delivery of the car then you should not have claimed for the car. The delivery company or the car dealership should have claimed. If you have claimed, it MUST be your asset (or your company's) therefore....

deanshepherd

A bit of 'substance over form' may be in point here..

Actually, why did they not just send you another car?

wannabebean

LOL Yes that would have worked even better! A very unsual situation.