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How to record an insurance payment

zkaufmanzkaufman Member Posts: 6

Hello

I had a machine go down and insurance covered the cost to replace. How do I record this transaction? I have a check from them to deposit, and then will need to pay contractors.

in Accounting Technical Support

Comments

  • SamdSamd Member Posts: 552 ✭✭✭

    Great question @zkaufman, but I'm sorry to hear a machine broke. I think to account for it most thoroughly, I would record an expense first with the value of the machine against your operating cost. This will be zeroed out when you deposit the replacement check, which you could categorize as a reimbursement for an operating expense. For good measure I'd throw in 'Insurance payment' into the notes of the deposit just to remind yourself down the road.

  • zkaufmanzkaufman Member Posts: 6
    Interesting. What about creating the boiler as an asset and depositing the money way to that account, and also categorizing the Payment as coming out of that?
  • SamdSamd Member Posts: 552 ✭✭✭

    @zkaufman that also would work really well - especially if you are already accounting for some of your operational costs/items as assets (or plan to). If you do go down that route, you could check out how to account for depreciation of assets as well: https://support.waveapps.com/hc/en-us/articles/208623506-How-do-I-handle-depreciation-and-amortization-

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