Indemnity accounting?

[David Bear]

This may be a question for an accountant. However, I would create an expense
account the represents the 'accident'. Expense accounts normally have a
debit balance but there's nothing to say that they cant have a credit
balance. Record the deposit as a debit to your cash account and a credit the
the expense account. Then, all future charges related to the accident will
be debited to the expense account. In the end, you will know whether you
came out ahead on the settlement.

And it is my understanding that insurance settlement payments of this nature
are not considered income. (at least in the US)

On 7/30/07, Dale Alspach <alspach at math.okstate.edu> wrote:
>
> I don't think you should use an income account for this. This is
> presumably payment from a loss. Your problem may be that what was damaged
> may not be in your accounts, e.g., bodily injury. In theory you had
> something of value, it decreased in value because of the accident and
> the insurance company is replacing the lost value.
>
> In the US this is not considered taxable income.  If it is not something
> in
> your accounts as an asset, at least I would label it non-taxable income.
>
> Dale Alspach
>
>
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-- 
David Bear
What's the difference between private knowledge and public knowledge?