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Accounting Treatment of Abnormal Loss

Abnormal loss is not treated as a part of the cost. Abnormal losses are valued at cost and are accounted in the books. They are calculated in the same manner as the value of unsold stock.


Actual abnormal loss or amount of abnormal loss to be transferred to P/L A/c = Abnormal loss at cost price - Insurance claim - Sale proceeds of goods (if any)

The following journal entry is passed to record for such a loss:

An abnormal loss may occur either before the goods are received by the consignee (i.e. loss during transit) or after the goods are received by the consignee (i.e. loss in Consignee’s godown).

The point to be noted here is that when the loss occurs during transit, the non –recurring expenses incurred by Consignee should be charged to the goods received by the consignee (i.e. total goods sent minus goods lost in transit & goods still in transit) only.

How to calculate: The amount of abnormal loss during transit & in Consignee’s godown may be calculated as under:

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