Accounting question :?

Question

what will be the accounting entry/ entries in the following case (Loss by fire / insurance claim): A lawyer's office ( registered as a company) which is insured for 5,00,000/-, is destroyed by fire.
The Co's books show the following fixed asset,at written down value ( depriciated value) all of which have since been destroyed by fire and nothing could be realised from the destroyed assets :
1) Furniture and fixtures : 20000/-
2) Computers and office equipments :
40000/-
3) Air condtioners, water coolers : Rs. 20000/-
4) Other office equipments : Rs. 20000/-
Total of Fixed Assets (w.d.v) = Rs. 1,00,000/-
Besides, destructon of the above fixed assets, office records etc, the fire had caused damage to walls, floors, ceilings and to the total office premises. The cost of restoratation of office premises works out to 300000/- (estimated).
Accordingly,the company has lodged a claim of Rs. 4,00,000/- with the Insurance co.
what entries should be passed to book the loss by fire?

I shall appreciate if the Journal entries along with the relevant figures for a) booking the loss by fire b) booking the Insurance claim.

Answer 1

I understand you need to know the journal entries to put through. In that case, I'll use the following assumptions:
F&F : Cost 40,000, Accd depn 20,000, nbv 20,000
Computers & off. equip. : Cost 80,000, Accd depn 40,000, nbv 40,000
Aircons, water coolers : Cost 40,000, Accd depn 20,000, nbv 20,000
Other off. equip. : Cost 40,000, Accd depn 20,000, nbv 20,000
The JEs would be as follows:
Dr Loss from fire 1,00,000
Dr Accd depn - F&F 20000
Dr Accd depn - Comp. & off. equip. 40000
Dr Accd depn - Aircons & coolers 20000
Dr Accd depn - Other off. equip. 20000
Cr Cost - F&F 40000
Cr Cost - Comp. & off. equip. 80000
Cr Cost - Aircons & coolers 40000
Cr Cost - Other off. equip. 40000
(to close off all entries relating to costs and accumulated depreciation of fixed assets lost in the fire)

Dr Restoration charges due to fire 3,00,000
Cr Restoration charges payable 3,00,000
(being estimated charges to restore office)

Dr Insurance claim receivable 4,00,000
Cr Loss from fire 1,00,000
Cr Restoration charges 3,00,000
(being compensation from insurer to cover losses)

Answer 2

For each asset or category of assets, you would debit a loss credit the asset account for its cost, and debit the depreciation account for its balance:

Loss from fire................................... xxxxx
Accumulated depreciation........... xxxxx
.......... Asset cost................................................................... xxxxxx

As for the insurance claim, you do not need an entry until the claim is paid, or if the claim is virtually sure to be paid you can make the entry to reduce the loss by the amount of the insurance recovery:

Insurance claim receivable............... xxxxx
...........Loss from fire.................................................................. xxxxx

Since you provide strange numbers (1,00,000) there is no point in my giving yo numeric answers.