AFAR.16 Insurance Contracts (Drill)

Under the general model of PFRS 17, a group of insurance contracts is initially measured at

Choices:

a. the fulfillment cash flows.

b. the contractual service margin.

c. a or b, as an accounting policy choice

d. sum of a and b

d. sum of a and b

Entity A obtains life insurance for its key employee from Entity B (an insurance company). Entity B cedes the insurance contract with Entity A to Entity C, another insurance company.

The contract between Entity A and Entity B is

Choices:

-

direct insurance contract

-

reinsurance contract

-

indirect insurance contract

-

retrocession

direct insurance contract

Entity A obtains life insurance for its key employee from Entity B (an insurance company). Entity B cedes the insurance contract with Entity A to Entity C, another insurance company.

How should Entity B account for the insurance contract with Entity C?

Choices:

-

using the general model or premium allocation approach without modification

-

using the general model or premium allocation approach with modification applicable to reinsurance contracts held

-

using the modified version of the general model applicable to onerous insurance contracts

-

any of these as a matter of accounting policy choice

using the general model or premium allocation approach with modification applicable to reinsurance contracts held

Which of the following is not one of the groupings of insurance contracts under PFRS 17?

Choices:

-

those that are onerous at initial recognition

-

those that, at initial recognition, have no significant possibility of becoming onerous in subsequent periods

-

those that are not onerous at initial recognition but can become onerous in subsequent periods

-

those that pay premiums at initial recognition which are to be measured using the simplified approach

those that pay premiums at initial recognition which are to be measured using the simplified approach

Mr. X obtains life insurance from Entity A (an insurance company). Entity A cedes 40% of the insurance risk in the insurance contract with Mr. X to Entity B, another insurance company.

The contract between Entity A and Entity B is a

Choices:

-

direct insurance contract.

-

indirect insurance contract.

-

reinsurance contract.

-

retrocession.

reinsurance contract.

According to PFRS 17, insurance finance income or expenses are

Choices:

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a. recognized in profit or loss.

-

b. disaggregated into amounts recognized in profit or loss and in other comprehensive income.

-

c. a or b

-

d. recognized directly in equity.

c. a or b

PFRS 17 requires an entity to combine its insurance contracts into portfolios and further subdivide the insurance contracts comprising each portfolio into groups. Which of the following is not one of the groups of insurance contracts within a portfolio?

Choices:

-

those that are onerous at initial recognition

-

those that, at initial recognition, have no significant possibility of becoming onerous in subsequent periods

-

those that are neither onerous at initial recognition nor expected to become onerous in subsequent periods

-

those that pay premiums at initial recognition which are to be measured using the simplified approach

those that pay premiums at initial recognition which are to be measured using the simplified approach

Entity A obtains life insurance for its key employee from Entity B (an insurance company). Entity B cedes the insurance contract with Entity A to Entity C, another insurance company.

The contract between Entity A and Entity B is

Choices:

-

direct insurance contract

-

indirect insurance contract

-

reinsurance contract

-

retrocession

direct insurance contract

Mr. X obtains life insurance from Entity A (an insurance company). Entity A cedes 40% of the insurance risk in the insurance contract with Mr. X to Entity B, another insurance company. '

The 40% insurance risk transferred to Entity B is called the

Choices:

-

cession.

-

retention limit.

-

net retention.

-

session road.

cession.

Entity A obtains life insurance for its key employee from Entity B (an insurance company). Entity B cedes the insurance contract with Entity A to Entity C, another insurance company.

How should Entity B account for the insurance contract with Entity C?

Choices:

-

a. using the general model

-

b. using the premium allocation approach

-

c. using the modified version of the general model applicable for onerous insurance contracts

-

d. using a modified version of (a) or (b) applicable to reinsurance contracts held

d. using a modified version of (a) or (b) applicable to reinsurance contracts

According to PFRS 17, insurance service result is recognized in

Choices:

-

a. profit or loss.

-

b. other comprehensive income.

-

c. a or b

-

d. partly a and partly b

a. profit or loss.

The legal principle that precludes you from obtaining fire insurance on your neighbor’s house with you as the beneficiary is

Choices:

-

Principle of Proximate Cause.

-

Principle of Utmost Good Faith.

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Principle of Insurable Interest.

-

Principle of Subrogation.

Principle of Insurable Interest.