What will be the journal entry for machinery destroyed on fire and insurance claim settled

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Originally Posted by Anil mahato

what will be the journal entry for machinery destroyed on fire and insurance claim settled

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Consider the Following
Accumulated Depreciation-75,000(till the fire happens)
Claim received from insurance-65000

On this basis,

we will come to know that the net book value of the machinery is 25,000 at the time of fire. But the insurance company give us 65000. It will be like a profit on disposal of machinery. If they given less that 25000 it will be a loss on disposal of machinery.


On this case the entry will be like this

Cr Machinery 100,000
Dr Accu Depreciation 75,000
Dr Cash(money from insurance) 65,000
Cr Profit on Disposal of machine 40,000


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