USA Property Insurance Reimbursement & Capitalization

[Kevin Kott]

Hello. I'm hoping for an answer to the following:

I am the fixed asset accountant for a non-profit retirement community in California. One of our residents drove his car through the rear wall of his unit's garage. Repairs to the garage totaled $6,800.00 and were capitalized as Property-Buildings & Improvements in July 2013. The invoice for the repair was also paid at this time.

Subsequently, out insurance company paid $7,100.00 for the loss and this amount is currently sitting in a clearing account.

Please advise as to the journal entry to recognize the $7,100.00 and remove it from the clearing account.

 

[bklynboy]

I would not have recorded any asset here. You are not out of pocket any cost since its covered by insurance. The difference between what the insurance company paid and the repair is treated as miscellaneous income (200 in this case).