Yes. Unexpired insurance, or prepaid insurance, represents value to the business since it has utility and is owned by the business (the company has claim to the policy). Therefore by definition, unexpired insurance is an asset.
The normal balance of unexpired insurance, which is classified as an asset on the balance sheet, is a debit balance. This reflects the prepaid portion of insurance premiums that have not yet been expensed. As the insurance coverage is consumed over time, the expense is recognized, reducing the asset balance accordingly.
Unexpired insurance at the end of fiscal year is that amount of insurance paid in advance but part of which is not consumed during fiscal year.
Current Asset
Prepaid insurance would be an asset. Insurance expense is when the insurance has been used up, thus making it an actual expense on the Income Statement. Whereas Prepaid Insurance on a Balance sheet is classified as an Asset.
To adjust the prepaid insurance account, you need to recognize the amount of insurance that has expired during the fiscal year. Starting with a prepaid insurance balance of $14,000 and an unexpired insurance amount of $3,000, the expired insurance is $14,000 - $3,000 = $11,000. The proper adjusting entry would be a debit to Insurance Expense for $11,000 and a credit to Prepaid Insurance for $11,000.
The normal balance of unexpired insurance, which is classified as an asset on the balance sheet, is a debit balance. This reflects the prepaid portion of insurance premiums that have not yet been expensed. As the insurance coverage is consumed over time, the expense is recognized, reducing the asset balance accordingly.
deferred nexpense
an asset, which is debited!
Unexpired insurance for the fiscal period is considered an asset, specifically a prepaid expense, rather than an expense. This is because it represents a payment made for insurance coverage that extends beyond the current accounting period, providing future economic benefits. As time passes and the coverage period elapses, the prepaid insurance will then be recognized as an expense in the income statement.
Unexpired insurance at the end of fiscal year is that amount of insurance paid in advance but part of which is not consumed during fiscal year.
In case of some expense u might have seen advance payment is done. So as to comply with the terms of agreement or it can befor any other reason too.And this advance is shown in the asset side of balance sheet.Now,in case of insurance the same thing is happening.For example:- a ltd. F.y begins from 1-4-10 to 31-3-11. A ltd. Purchases a fixed asset on 1-2-11. Now a ltd. Wants to get this fixed asset insured and minimum insurance period as per the insurance policy is 1 year. So here the insurance period willbegin from 1-2-11 to 28-2-12.As per accrual basis of accounting expenses which pretain to a particular year are are to be shown in the p/l of that year. And rest are shown as prepaid expense (in case of insurance termed as , unexpired insurance)now coming back to a ltd. Let us suppose that payment made is = rs. 12000.Calculation of expired and unexpired expense.Total insurance expense paid = 12000insurance expense of single = 12000/12monthexpired insurance = 1000*2 (for the month of feb and march 2011)and rest of the amount is unexpired insurance because the period to which it pertains is of next f.y. Hence in the b/s of 10-11 insurance amount of rs 10000 will be shown as unexpired insurance.And yes one thing more. There is no such term as unexpired prepaid insurance. Either u call it prepaid insurance or unexpired insurance.Hope i solved ur query.
those expenses which have been paid in advance and whose benefit will be available in future are called unexpired or prepaid expenses. e.g. insurance premium
Current Asset
Asset.
Prepaid insurance would be an asset. Insurance expense is when the insurance has been used up, thus making it an actual expense on the Income Statement. Whereas Prepaid Insurance on a Balance sheet is classified as an Asset.
To adjust the prepaid insurance account, you need to recognize the amount of insurance that has expired during the fiscal year. Starting with a prepaid insurance balance of $14,000 and an unexpired insurance amount of $3,000, the expired insurance is $14,000 - $3,000 = $11,000. The proper adjusting entry would be a debit to Insurance Expense for $11,000 and a credit to Prepaid Insurance for $11,000.
Prepaid insurance is that amount which is paid in advance for future insurance so until actual insurance facility is availed by company it is an asset of company and if it is for short term or will be availed in current fiscal year then it is current asset otherwise a fixed asset, if some portion is usable in current fiscal year then only that portion will be current asset and remaining will be fixed asset.