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INSURANCE PAYOFF OF VEHICLE
I have a vehicle that was totaled. The insurance paid off the bank. How do I enter into QB? Thank you as always!
where you ever able to get an answer on this? I have the same issue and can't fine how to handle the direct payoff of the vehicle from the insurance company.
There are several ways this can be recorded but it depends on a few things:
1) Was the insurance settlement amount the exact amount of the loan balance?
2) If not, did you receive cash or did you have to pay off any remaining loan balance?
3) Do you know how much depreciation has been taken on the vehicle up until the date it was out of service?
If the insurance settlement was the exact amount of the loan payoff and you don't know how much depreciation was taken, make a journal entry: debit the loan payable liability account for the balance and credit 'Gain/Loss On Asset Disposal' (set that up as an Other Income account). Your CPA/tax accountant will make the entry that removes the fixed asset, closes Accumulated Depreciation and book the difference to Gain/Loss. If you do know the amount of Accumulated Depreciation, the journal entry looks like this:
| Debit | Credit | |
| Loan Payable (to close) | XXX | |
| Accumulated Depreciation (to close) | XXX | |
| Vehicle's Fixed Asset Account (to close) | XXX | |
| Gain/Loss On Asset Disposal (to balance the journal entry - loss if debit, gain if credit) |
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