ABC Corporation ensures the life of its Chief Executive Officer for P3,000,000, indicating the corporation as the beneficiary of an ordinary life policy. The annual premium of P100,000 is payable every January 2nd of the year. The policy is dated January 2, 2021, and carries the following cash surrender values: 2021                                           – 2022                                           - 2023                                     60, 000 2024                                     70, 000 2025                                     89, 200 2026                                     110,800 The corporation follows the calendar year as its fiscal period. President dies on September 30, 2026, and policy is collected on December 2, 2026.  Answer the questions: 1. What is the amount of insurance expense to be shown in the statement of financial position on 2023? 2. Compute the cash surrender value @ September 2026. 3. Determine the value of insurance expense on 2026.  4. On the year 2023, what is the amount to be decreased in retained earnings value?    5. How much is the gain on life insurance settlement?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Corporation ensures the life of its Chief Executive Officer for P3,000,000, indicating the corporation as the beneficiary of an ordinary life policy. The annual premium of P100,000 is payable every January 2nd of the year. The policy is dated January 2, 2021, and carries the following cash surrender values:

2021                                           –

2022                                           -

2023                                     60, 000

2024                                     70, 000

2025                                     89, 200

2026                                     110,800

The corporation follows the calendar year as its fiscal period. President dies on September 30, 2026, and policy is collected on December 2, 2026.

 Answer the questions:

1. What is the amount of insurance expense to be shown in the statement of financial position on 2023?

2. Compute the cash surrender value @ September 2026.

3. Determine the value of insurance expense on 2026. 

4. On the year 2023, what is the amount to be decreased in retained earnings value?   

5. How much is the gain on life insurance settlement?

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