October 30, 2016 admin

Cash Value of Life Insurance

Assets

CASH VALUE OF LIFE INSURANCE ASSET ACCOUNT
1820

ACCOUNT EXPLANATION
Cash surrender value, including accrued dividends and interest, of insurance on the lives of officers and employees of which the dealership is the beneficiary.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Monthly increases in cash surrender value SE
    Cash Value of Life Insurance 1820
      Insurance—Officers’ Life 8600
             
  Proceeds from life insurance surrendered CR
    Cash in Bank—General 1001
      Cash Value of Life Insurance 1820
             
  Proceeds from life insurance on death of insured CR
    Cash in Bank—General 1001
      Cash Value of Life Insurance 1820
      Other Income 9300
COMMENTS
  • The increase in cash surrender value can be determined from the insurance policy or insurance company.
  • Special treatment of officers’ life insurance premiums and proceeds may be required for income tax purposes, and dealer should consult tax counsel as necessary.
  • A subsidiary record should be maintained to support this account showing: policy number, insurance company, face amount of policy and cash surrender value.