Insurance claim accounting

[apcotex Industres Ltd.]

We are manufacturing company, have appointed consignment agents for effecting sale.

one of our consignment was damaged in transit. hence we lodged an insurance claim for the damaged goods. this is accounted as insurance claim receivable.

further the surveyor found a party & sold the entire lot at discounted price on basis of commercial invoice issued by us. the goods were in possession of the surveyor at time of sale & were not brought back to factory. the balance amount is receivable from the insurance company.

My question is should we account the commercial invoice as sale & reflect in turnover

or the sales proceeds should be adjusted against insurance claim receivable.

[DR.MARIAPPAN GOVINDARAJAN]

Have you got clarified in this Issue?

AI Summary

Insurance claim accounting: whether commercial invoice sale should be recognised or proceeds offset against claim. Goods on consignment were damaged in transit and an insurance claim recorded as an insurance claim receivable. A surveyor sold the damaged lot on the basis of the company's commercial invoice while in surveyor possession and the balance is receivable from the insurer. The core accounting issue is whether to recognise the commercial invoice as a sale reflected in turnover, or to apply the sale proceeds against the insurance claim receivable.