How would I account for a payment from insurance? The payment is for damages to property.
submitted by jennifer

lenore

You'd record it as cash or receivable, depending on whether you already received the money or not. If the damage was already recorded as an expense, you might need to record the insurance money as a recovery or an income. If it's for repairs, you can offset the repair costs or reduce the asset value if you're restoring the property.

the spork

The insurance proceeds are considered a gain or other income.

Have you expensed the damages? If so, you should reduce the related asset or expense accordingly.

Essentially, you credit your insurance receivable or cash account and debit the appropriate asset or income account, depending on whether it's compensation for damage or reimbursement of repair costs.