ASSIGNMENT 3.2 INSURANCE CONTRACT
IFRS 17 requires entities to identify portfolios of insurance
LIABILITY
Related data of Aurora Insurance company:                              c. Each portfolio of insurance contracts issues shall be divided into
Estimated annual cash inflows                 1,250,000     
Estimated payment of Investment due to insurance
contract              500,000        
Discount rate                        12%   
The insurance portfolio will run in 8 periods.                        
Risk adjustment for non-financial risk                 288,000         of estimates of future cash flows and the contractual service
Contractual service margin                         5,000,000    
The entity used 4 decimal places for the PV
factor.                             
How much is the Insurance contract liability?      1,562,300
Related data of Belle Insurance company:                     and the contractual service margin only.
Estimated annual cash inflows                 800,000
Estimated payment of Investment due to insurance
contract              350,000
Discount rate                        10%
The insurance portfolio will run in 5 periods.                 a. Contractual service margin
Risk adjustment for non-financial risk                 120,000
Contractual service margin                        1,200,000
The entity used 4 decimal places for the PV factor.                  d. Risk adjustment for non-financial risk
How much is the Insurance contract liability?          0
    
Quiz 3.1 Insurance contracts
1.Which account is debited to record the earned portion of the
insurance contract when the premium is paid monthly?
a. Insurance contract asset
b. Insurance contract liability
c. Insurance contract revenue
d. Insurance contract expense
2. Which statement is correct?
a. Contracts within a product line would be expected to not have
similar risks and hence would be expected to be in the same
portfolio if they are managed together.
b.
contracts, which comprises contracts that are not subject to similar
risks and managed together
a minimum of a group of contracts that are not onerous at initial
recognition.
d. An entity is not permitted to include contracts issued more than
one year apart in the same group.
3. Which statement is correct?
    
a. An entity shall measure a group of insurance contracts at a total
margin only.
b. An entity shall measure a group of insurance contracts at a total
of fulfillment cash flows and the contractual service margin only.
c. An entity shall measure a group of insurance contracts at a total
of estimates of future cash flows, risk adjustment for financial risk
d. An entity shall measure a group of insurance contracts at a total
of estimates of future cash flows only.
4. Which represents the unearned profit of the group of insurance
contracts that the entity will recognize as it provides services in
the future
b. Fulfillment cash flows
c. Discount rates
5. Which statement is correct?
a. An insurance contract is onerous at initial recognition if the total
of the FCF, any previously recognized acquisition cash flows and
any cash flows arising from the contract at that date is a net
inflow.
b. An insurance contract is onerous at initial recognition if the total
of the FCF, any previously recognized acquisition cash flows and
any cash flows arising from the contract at that date is a net
outflow.
c. An insurance contract is onerous at initial recognition if the total
of the FCF, any previously not recognized acquisition cash flows
and any cash flows arising from the contract at that date is a net
outflow
d. An insurance contract is onerous at initial recognition if the total
of the FCF, any future recognized acquisition cash flows and any
cash flows arising from the contract at that date is a net outflow.
6. Which is not presented separately in the statement of financial
position?
a. Insurance contracts issued that are liabilities
b. Reinsurance contracts held that are assets Contractual service margin                                                             
2,800,500    
c. Investment contracts issued that are assets
The entity used 2 decimal places for the PV
d. Insurance contracts issued that are assets factor.                             
7. On August 15, 2021, TLC Company entered into a 12-month How much is the Insurance contract liability?    1,783,000
cellphone insurance portfolio amounting to         P1,500,000.
12. The related data of Mariah Insurance company:                 
At the same time, it paid an acquisition insurance cash flow of
P900,000.              Estimated annual cash inflows                
P700,000
The premium will be collected at the end of the
contract.                                                        Estimated payment of Investment due to insurance contract           
500,000
What is the amount of insurance contract revenue reflected in the
2021 income statement?    562,500 Discount rate                                                                                   
15%
8.What is the amount of insurance contract liability on December
31, 2021?    0 The insurance portfolio will run in 5 periods.                

9. On December 31, 2020, Braxton Company reported an Risk adjustment for non-financial risk                                             
insurance contract revenue of P2,290,000. P115,000

It is a result of three portfolio insurance:                                     Insurance contract asset                                                                 

320,000
                        Total contract price              Terms            
The entity used 2 decimal places for the PV factor.                        
Portfolio 1      P3,150,000         March 1, 2020 to August 31,
2021                        How much is the Contractual service margin?   235,000

Portfolio 2         960,000        July 1, 2020 to June 30, 2021       

Portfolio 3                  ?   October 1, 2020 to September 30,

2021

What is the total contract price of portfolio 3?      240,000     

10. The related data of Neyo Insurance company:                    

Present value of estimated future cash inflows             P3,750,000

Present value of estimated future cash outflows           3,100,000

Insurance contract (asset) / liability                                 212,500

Contractual service margin        1,200,000

How much is the Risk adjustment for non-financial risk?   337,500

11. The related data of Whitney Insurance

company:                          

Estimated annual cash inflows                

P900,000   

Estimated payment of Investment due to insurance contract           

650,000        

Discount rate                                                                                   
10%   

The insurance portfolio will run in 7 periods.                            

Risk adjustment for non-financial risk                                             

200,000