Problem 3.3 Problem 3.3The Contractual Service Margin in insurance contracts is:1) Recognized immediately as profit2) Released over the coverage period3) Added to insurance liability4) Expensed as incurred

Concept of Contractual Service Margin (CSM)The CSM represents the unearned profit that an insurer…

Answered: Problem 3.3 The Contractual Service…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 41RSCQ

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_____ is a contract that involves compensation for specific potential future losses in exchange for periodic payments and that provides for the transfer of the risk of a loss, from one entity to another, in exchange for a premium. a.Spot contract b.Insurance c.Hedging d. Forward contract
1. The significant risk that is transferred from the policyholder to the issuer of an insurance contract is:a. Lapse or persistency riskb. Financial riskc. Expense riskd. Insurance risk2. Under the general model of PFRS 17, a group of insurance contracts is initially measured at:a. The fulfillment cash flowsb. The contractual service marginc. Either a or bd. Both a and b3. A group of insurance contracts is subsequently measured at:a. The liability for remaining coverageb. The liability for incurred claimsc. Either a or bd. Both a and b4. According to PFRS 17, an insurance contract is NOT derecognized when:a. Expiredb. Terms have been modified, and the modification is not substantivec. Terms have been modified, and the modification is substantived. Extinguished5. According to PFRS 17, an accounting service result is recognized in:a. Profit or lossb. Other comprehensive incomec. Statement of financial positiond. Partly in profit or loss, and partly in other comprehensive incomeUse the…
Sub: Accounting
What is the consideration for the insurer in an insurance contract? 1.Premiums Paid 2.Risk Avoidance 3.The literal piece of paper the contract is written on is the consideration 4.An Insurance Contract does not require consideration
Accounting problem
S1: The straight-line method computes the unearned premiums, policy by policy, on a pro-rata basis in respect of the unexpired periods of the respective insurance policies at the end of each period. S2: PFRS 17 exempts an insurer temporarily from some requirements of other PFRS in selecting accounting policies for insurance contract for liability adequacy test. S3: Insurers shall disclose the following information that identifies and explains the amounts in its financial statements arising from insurance contract which includes its accounting policies for insurance contract and related assets, liabilities, income and expenses. a. Only S3 is incorrectb. All statements are correctc. Only S2 is correctd. Only S3 is correcte. Only S1 is incorrectf. Only S2 is incorrectg. All statements are incorrecth. Only S1 is correct
When should a company report the cost of an insurancepolicy as an expense?a. When the company first signs the policy.b. When the company pays for the policy.c. When the company receives the benefits from thepolicy over its period of coverage.d. When the company receives payments from the insurance company for its insurance claims.
Question- The contact asset
Question
S1: One characteristic of an insurance contract is to transfer insignificant risk from the policyholder to the issuer. S2: Under the general model of PFRS 17, a group of insurance contract is initially measured at the fulfillment cash flows and the contractual service margin.A. Both statements are correctB. Only S1 is correctC. Both statements are incorrectD. Only S1 is incorrect
C. Claim form D. Policy form 20. The written insurance document that may include all clauses, exception and conditions is called O A. endorsement O B. claim form O C. certificate of insurance O D. policy form 21. What is the form that filled out by insured if a loss is suffered? *
The practice of recording advance payments from customers as a liability is an example of applying the O Going concern assumption. O Monetary unit assumption. O Historical cost principle. Revenue recognition principle.

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Problem 3.3 The Contractual Service Margin in insurance contracts is: 1) Recognized immediately as profit 2) Released over the coverage period 3) Added to insurance liability 4) Expensed as incurred