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Keystone527
February 15, 2023
Question

Insurance payout on totaled vehicle

  • February 15, 2023
  • 1 reply
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We had company vehicle that was totaled in an accident. We bought it used, paid $10,000.  The insurance payout was $30,000. How do I enter this payment? what else do I need to know in this case with such a difference in amounts? TIA

1 reply

Rainflurry
Rainflurry
February 16, 2023

@Keystone527 

 

Did you take depreciation on the vehicle?  If not, and you should have, you will need to contact your CPA/tax accountant.  If you purchased the vehicle and wrecked it in the same fiscal year (FY), create a journal entry as shown below.  The $20K difference is income.  Again, this only applies if you purchased and wrecked the vehicle in the same FY.

 

 DebitCredit
Cash30,000 
   Vehicle (to close) 10,000
   Gain on disposition of vehicle (other income) 20,000

 

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