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Insurance Claim

In Illustration 11 how do we get the amount of Uninsured Standing charges as 130000? There's no information given in the question regarding it and also in lecture no discussion was made on this point


Priyanka Udeshi

Priyanka Udeshi

CA Inter

5K+

17-Feb-21 01:22

22

Answers (9)

Best Answer

Oh! I wasn't aware of that. Thank you Is there any reference for this note anywhere? How do we determine whether it's a fixed charge

Fixed charges are those charges that incur no matter what the turnover is. These charges are what the company takes insurance for incase for a loss of profit. Selling expenses on the other hand varies based on turnover and aren't considered as a fixed expense.


Kishore Anil

Kishore Anil

CA Inter

395

17-Feb-21 13:08

Admin expense + Finance charges - Standing Insurance Charges


Kishore Anil

Kishore Anil

CA Inter

395

17-Feb-21 10:45

According to the given information standing charges include administrative expenses (80,000) and finance charges (1,00,000). Insured standing charges being 50,000, uninsured standing charges would be 1,30,000 (1,80,000 - 50,000).


ruchi lahoti

ruchi lahoti

Moderator

17-Feb-21 10:56

But ma'am in question no such thing is mentioned so how do we ascertain that?

You'll have to figure it out on your own in this question since the detail isn't given out specifically. Total charges in P/L - Standing Insured Charges will give the balance as Standing Uninsured Charges.


Kishore Anil

Kishore Anil

CA Inter

395

17-Feb-21 11:46

You'll have to figure it out on your own in this question since the detail isn't given out specifically. Total charges in P/L - Standing Insured Charges will give the balance as Standing Uninsured Charges.

Total Charges in P&L = 80000+20000+100000= 2lacs (-) Standing ins charges = 50000 (given) =1.5lacs â? 1.2lacs So when information is not available how do we know that we have to take only 180000 and not 2lacs?


Priyanka Udeshi

Priyanka Udeshi

CA Inter

5K+

17-Feb-21 11:57

We do not take selling expenses since its not a fixed charge.

Oh! I wasn't aware of that. Thank you Is there any reference for this note anywhere? How do we determine whether it's a fixed charge


Priyanka Udeshi

Priyanka Udeshi

CA Inter

5K+

17-Feb-21 12:19