Prepaid Insurance

Code: 1162
👁 Views: 111

Account Information

Financial Statement Statement of Financial Position
Normal Balance Debit

Definition

Insurance premiums paid in advance to cover future periods

Common Journal Entries

Pay insurance premium in advance

Dr. Prepaid Insurance
Cr. Bank Account

Amortize prepaid insurance

Dr. Insurance Expense
Cr. Prepaid Insurance

Renew insurance policy

Dr. Prepaid Insurance
Cr. Cash in Hand

Year-end insurance adjustment

Dr. Insurance Expense
Cr. Prepaid Insurance

Pay insurance premium in advance

Dr. Prepaid Insurance
Cr. Bank Account

Amortize prepaid insurance

Dr. Insurance Expense
Cr. Prepaid Insurance

Renew insurance policy

Dr. Prepaid Insurance
Cr. Cash in Hand

Year-end insurance adjustment

Dr. Insurance Expense
Cr. Prepaid Insurance

📐 IFRS vs US GAAP Accounting Treatment

IFRS IAS 1 Presentation of Financial Statements
US GAAP ASC 340 Other Assets and Deferred Costs

❓ Frequently Asked Questions

Q: Can prepaid insurance be refunded if the policy is canceled?

A: Usually yes, the company receives a refund for the unexpired period (minus administrative fees). The refund is recorded as income or expense reduction.