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 c. a or b d. Not accounted for under PFRS 17 2. How does Entity C account for the insurance contract ceded by Entity B? a. General model b. Premium Allocation Approach c. a orb 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
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 c. a or b d. Not accounted for under PFRS 17 2. How does Entity C account for the insurance contract ceded by Entity B? a. General model b. Premium Allocation Approach c. a orb 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please help me to answer (provide) a short or brief explanation for each answer
Answers:
1. C
2. C
3. D
Transcribed Image Text: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
c. a or b
d. Not accounted for under PFRS 17
2. How does Entity C account for the insurance contract ceded by Entity B?
a. 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
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