a. General model b. Premium Allocation Approach c. a or b d. Not accounted for under PFRS 17 2. How does Entity C account for the insurane a. General model b. Premium Allocation Approach c. a or b C. d. Modification to general model for reinsL

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Use the following information for the next three questions:
Entity A, a manufacturing entity, obtains insurance against product liability from Entity B, an
insurance company. Entity B then cedes the insurance contact with Entity C, another insurance
company.
1. How does Entity B account for the insurance contract with Entity A?
a.
General model
b. Premium Allocation Approach
a or b
d. Not accounted for under PFRS 17
2. How does Entity C account for the insurance contract ceded by Entity B?
General model
b. Premium Allocation Approach
c. a or b
d. Modification to general model for reinsurance contracts held
3. How does Entity B account for the insurance contract ceded to Entity C?
a.
General model
b.
Premium Allocation Approach
C a or b
d. Modification to general model for reinsurance contracts held
OAD O 3)
Transcribed Image Text:Use the following information for the next three questions: Entity A, a manufacturing entity, obtains insurance against product liability from Entity B, an insurance company. Entity B then cedes the insurance contact with Entity C, another insurance company. 1. How does Entity B account for the insurance contract with Entity A? a. General model b. Premium Allocation Approach a or b d. Not accounted for under PFRS 17 2. How does Entity C account for the insurance contract ceded by Entity B? General model b. Premium Allocation Approach c. a or b d. Modification to general model for reinsurance contracts held 3. How does Entity B account for the insurance contract ceded to Entity C? a. General model b. Premium Allocation Approach C a or b d. Modification to general model for reinsurance contracts held OAD O 3)
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