Amazon FBA Reimbursement Accounting: How to Book Lost and Damaged Inventory Claims
What Are Amazon FBA Reimbursements?
When Amazon loses, damages, or mishandles your inventory, they owe you money. Amazon calls these payments reimbursements, and they appear as positive credits in your settlement report under specific amount-description codes. They're separate from your product sales revenue and require distinct accounting treatment.
FBA reimbursements trip up bookkeepers for two reasons:
- They're buried inside the settlement report among dozens of other line types — easy to overlook or miscategorize
- There's a genuine accounting debate about how to classify them: as other income, or as an offset against COGS
This guide covers both: how to find them in your settlement data, and how to book them correctly.
Types of FBA Reimbursements
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Try the free Settlement Summary Viewer →Amazon issues reimbursements for several different situations:
Lost in Warehouse
Amazon misplaced your inventory during receiving, storage, or picking. Amazon's system eventually flags the unit as unrecoverable and pays you its estimated sale price (minus fees) or a flat amount based on your historical selling price.
Settlement codes: WAREHOUSE_LOST, MISSING_FROM_INBOUND
Damaged in Warehouse
Your inventory was damaged by Amazon staff during storage or handling. Amazon pays a reimbursement based on estimated retail value.
Settlement codes: DAMAGED_WAREHOUSE, DAMAGED_UNSELLABLE_RETURN
Customer Return Processing Errors
A customer returned an item, but Amazon put it back into sellable inventory when it was actually damaged — then sold it, resulting in a bad review and a return claim. Amazon reimburses for the mishandled return.
Settlement codes: REVERSAL_REIMBURSEMENT, CS_ERROR_ITEMS_RETURN
Overcharge Corrections
Amazon occasionally overcharges FBA fulfillment fees (incorrect weight/dimension measurement). When FBA fee audits catch overcharges, Amazon credits the difference back.
Settlement codes: FBA_WEIGHT_AND_DIMS_CORRECTION, INCORRECT_FEES_ITEMS
Clawbacks (Negative Reimbursements)
Sometimes Amazon issues a reimbursement and then reverses it when they later find the unit. These appear as negative reimbursements — a deduction from your settlement. They use the same codes but with a negative amount. Always watch for these so you don't record a reimbursement and then miss the clawback.
How Reimbursements Appear in the Settlement Report
In an Amazon V2 settlement CSV, reimbursement lines have these characteristics:
| Field | Value |
|---|---|
amount-type |
other or Payable |
amount-description |
One of the codes above |
amount |
Positive value (credit to you) |
quantity-purchased |
Number of units reimbursed |
A real settlement line might look like:
amount-type: other
amount-description: WAREHOUSE_LOST
amount: 28.99
quantity-purchased: 1
When building your journal entry, you need to identify all reimbursement lines, sum them by type, and map them to the correct accounts.
The Income vs. COGS Offset Question
This is where bookkeepers disagree, and the answer depends on your client's accounting basis and sophistication.
Option A: Record as Other Income
| Account | Debit | Credit |
|---|---|---|
| Amazon Seller Balance (clearing) | $28.99 | |
| FBA Reimbursement Income | $28.99 |
When to use: Simple, clean, easy to explain. Works well for cash-basis businesses. The reimbursement shows up on the P&L as income, separate from sales revenue. Tax advisors can easily see it.
Downside: Overstates gross profit margins slightly, because you're recovering an inventory cost (COGS) but recording it as income rather than as a reduction of expense.
Option B: Offset Against COGS
| Account | Debit | Credit |
|---|---|---|
| Amazon Seller Balance (clearing) | $28.99 | |
| Cost of Goods Sold | $28.99 |
When to use: Accrual-basis businesses where you originally recorded the lost inventory at cost. The logic: you paid $15 for this unit, wrote it off as COGS when it was lost, and now Amazon is giving you back $28.99 — more than cost. The portion above cost could be other income; the cost recovery portion reduces COGS.
Downside: More complex. Requires knowing the COGS for the specific unit, which isn't always available.
Option C: Split Treatment (Most Accurate)
For clients who want the most accurate books:
| Account | Debit | Credit |
|---|---|---|
| Amazon Seller Balance | $28.99 | |
| Cost of Goods Sold | $15.00 | |
| FBA Reimbursement Income | $13.99 |
This records the cost recovery ($15.00) as a COGS offset and the markup ($13.99) as other income. It requires knowing your landed cost per unit.
Recommendation for most clients: Use Option A (Other Income). It's correct for tax purposes, simple to audit, and doesn't require unit-level COGS data. Reserve Option C for sophisticated clients who track COGS precisely.
Worked Journal Entry: Full Settlement with Reimbursements
Suppose a settlement contains these reimbursement lines alongside normal activity:
| Category | Amount |
|---|---|
| Product sales (principal) | $8,240.00 |
| Amazon FBA fees | −$1,236.00 |
| Amazon referral fees | −$1,154.60 |
| Refunds | −$389.00 |
| Warehouse lost reimbursement (3 units) | $86.97 |
| Fee overcharge correction | $14.25 |
| Net payout | $5,561.62 |
Using Option A (Other Income) for reimbursements:
| Account | Debit | Credit |
|---|---|---|
| Bank Account | $5,561.62 | |
| Amazon FBA Fulfillment Fees | $1,236.00 | |
| Amazon Referral Fees | $1,154.60 | |
| Sales Returns & Allowances | $389.00 | |
| Sales Revenue | $8,240.00 | |
| FBA Reimbursement Income | $86.97 | |
| FBA Fee Corrections | $14.25 | |
| Totals | $8,341.22 | $8,341.22 |
Tracking Reimbursements for Audit Purposes
If your client is actively submitting FBA reimbursement claims (using a service like GETIDA or Seller Investigators), keep a reimbursement log that maps: - Amazon case ID - Reimbursement type - Unit count - Amount - Settlement period it appeared in
This log is useful for: - Confirming claimed amounts were actually paid - Avoiding double-recording when a reimbursement spans multiple settlement periods - Answering auditor questions about non-sales income
How SettleBooks Handles Reimbursements
SettleBooks automatically detects reimbursement lines in Amazon V2 settlement files, sums them by type, and maps them to your configured accounts. By default, reimbursements are mapped to FBA Reimbursement Income (Other Income), but you can override this in your category mappings to use COGS offset or the split treatment instead.