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Insurance - How do you recognize a loss on an insurance claim when accumulated depreciation is invol

Last week, we discussed on how to record a payment on a claim. We looked at a scenario of when your building caught on fire, and you loss all of your inventory. We booked a 100% value of your inventory, and then we booked a loss on your inventory.

Today, allow me discuss on how to record a loss of your delivery vehicle when accumulated depreciation is applied.

You bought your delivery vehicle for $25,000. You expect the useful life of your delivery vehicle to last five years. The accumulated depreciation would be $5,000 per year that will need to be expensed.

The amount that you expect to be paid by your insurance company is $2,500. How would you record your entry?

Debit - Insurance Asset: $2,500

Debit - Accumulated Depreciation: $5,000

Debit - Loss: $2,500

Credit - Delivery Vehicle (asset): $10,000

After 30 days, you received a not so nice check from your insurance carrier. How would you record that entry?

Credit - Insurance Asset: $2,500

Debit - Bank Cash Account: $2,500

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