INSURANCE PAYOFF OF VEHICLE

kelper62 · ‎August 19, 2024

I have a vehicle that was totaled. The insurance paid off the bank. How do I enter into QB? Thank you as always!

Rainflurry · ‎September 26, 2024

There are several ways this can be recorded but it depends on a few things:

1) Was the insurance settlement amount the exact amount of the loan balance?

2) If not, did you receive cash or did you have to pay off any remaining loan balance?

3) Do you know how much depreciation has been taken on the vehicle up until the date it was out of service?

If the insurance settlement was the exact amount of the loan payoff and you don't know how much depreciation was taken, make a journal entry: debit the loan payable liability account for the balance and credit 'Gain/Loss On Asset Disposal' (set that up as an Other Income account). Your CPA/tax accountant will make the entry that removes the fixed asset, closes Accumulated Depreciation and book the difference to Gain/Loss. If you do know the amount of Accumulated Depreciation, the journal entry looks like this:

	Debit	Credit
Loan Payable (to close)	XXX
Accumulated Depreciation (to close)	XXX
Vehicle's Fixed Asset Account (to close)		XXX
Gain/Loss On Asset Disposal (to balance the journal entry - loss if debit, gain if credit)

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Just_me · ‎August 19, 2024

Create an income type account in the chart of accounts called Gain/Loss on assets
then journal entries

Debit gain/loss and credit the fixed asset account for the balance in the fixed asset account
Deposit the check received and use the gain loss account as the source account for the deposit

Debit the accumulated depreciation fixed asset account for the balance in that account and credit the gain loss account.

kelper62 · ‎August 19, 2024

Thank you for the response. However...I am a novice at this. Can you dumb it down for me? Also the insurance company did not send me a check for the vehicle payoff. The insurance sent the payoff check to the lender direct. Are the steps the same when the payment was sent to the lender direct? I have attached a screen shot showing the payment to the lender.

Ess0422 · ‎September 26, 2024

where you ever able to get an answer on this? I have the same issue and can't fine how to handle the direct payoff of the vehicle from the insurance company.

Rainflurry · ‎September 26, 2024

@Ess0422

There are several ways this can be recorded but it depends on a few things:

1) Was the insurance settlement amount the exact amount of the loan balance?

2) If not, did you receive cash or did you have to pay off any remaining loan balance?

3) Do you know how much depreciation has been taken on the vehicle up until the date it was out of service?

If the insurance settlement was the exact amount of the loan payoff and you don't know how much depreciation was taken, make a journal entry: debit the loan payable liability account for the balance and credit 'Gain/Loss On Asset Disposal' (set that up as an Other Income account). Your CPA/tax accountant will make the entry that removes the fixed asset, closes Accumulated Depreciation and book the difference to Gain/Loss. If you do know the amount of Accumulated Depreciation, the journal entry looks like this:

	Debit	Credit
Loan Payable (to close)	XXX
Accumulated Depreciation (to close)	XXX
Vehicle's Fixed Asset Account (to close)		XXX
Gain/Loss On Asset Disposal (to balance the journal entry - loss if debit, gain if credit)

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INSURANCE PAYOFF OF VEHICLE