Insurance payout

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Dottie
Dottie Registered Posts: 99 Regular contributor ⭐
in General accounting discussion
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

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  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
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    In P&L as 'Other Income' after operating profit?
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    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
    DaveP Registered Posts: 79 Regular contributor ⭐
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    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
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    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
    Dottie Registered Posts: 99 Regular contributor ⭐
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    Thanks. I had thought part of it should be shown as disposal proceeds re the fixed assets.

    Much appreciated!

    Dottie
  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
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    I would enter as a sale to the insurance company!
  • Baggybooks
    Baggybooks Registered Posts: 522 Epic contributor 🐘
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    Why?

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