Delayed payment of proceeds from Life Assurance - how to record?
Wm
wm+gnc at tarrcity.demon.co.uk
Wed Dec 24 14:59:10 EST 2014
Tue, 23 Dec 2014 05:22:59
<ECE58C40-C6A8-40D4-8BEE-478EC0A88807 at gmail.com> Michael Hendry
<hendry.michael at gmail.com>
>In 2008 (before I started using GnuCash for my personal accounts) I
>surrendered a couple of Endowment Life Assurance Policies as I no
>longer needed the life cover, and the rate of return was low.
>There was an error in the calculation of the amount due, and I’ve
>just received a cheque for the balance.
>Apart from a 1% interest payment for the overdue amount, this is not
>Income, but rather the realisation of an asset.
How best should I record this asset - by going back to 2010 (when I
first started using GC) and entering it as a starting balance (even
though I didn’t know about it then, and would have had difficulty in
asssessing its value? or by creating a new asset from that date which
has a value of zero, and revaluing it at the appropriate sum with effect
from the date I heard of the error? or by some other procedure.
More of a bookkeeping question than a GC query, I realise, but I expect
one of you has already grappled with this question.
Dr D has it more or less right.
You record the transaction naturally, i.e.
you deposited a cheque in an asset a/c on a date, some of it might be
income (the 1%) the main part is return of an asset
if the other leg sensibly predates your gnc accounting you should
probably put it into a specific equity account as this was something you
had all the time.
within equity you can then split it back in time
eg xfer the amount from Equity:hahaLifeIJustGot to
Equity:hahaLifeIhadAllTheTime using the date (which may pre-date your
gnc accounts or may just be a representative date if it happened over a
period of time) at which money exited your assets to fund the LifeThing.
Taxation of Life Assurance can be weird particularly if they are used as
savings or tax havens and your jurisdiction is probably different to
mine, etc. I'm just saying what the natural transfers are, OK?
--
Wm...
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