Reference no: EM133047355
Questions -
Q1. Statement 1: Proportional reinsurance is a form or reinsurance where corporate is ceded on the basis of a contract between the ceding insurer and the reinsurer, whereby the ceding insurer agreed to cede and the reinsurer agrees to accept automatically the reinsurance of the risk written by the ceding insurer, which fall within the scope of the agreement, subject to the limits and terms specified therein. Statement 2: Retrocession is a reinsurance assumed where the reinsurer will retrocede a whole or a part of the risk accepted from the direct insurer to another reinsurer. Statement 3: Ceding insurer is an insurer that reinsures part of the whole of a risk with one or more reinsurance, the risk is considered as an inward reinsurance.
Only Statement 1 is correct
Only Statement 1 is incorrect
Only Statement 2 is correct
Only Statement 2 is incorrect
Only Statement 3 is correct
Only Statement 3 is incorrect
All statements are correct
All statements are incorrect
Q2. Statement 1: PFRS 17 allows and insurer to change its accounting policies for insurance contract only if, as a result of its financial statements present information that is more relevant. Statement 2: Outward Reinsurance is where the premium and commission shall be accounted for in the different accounting period original policy to which the reinsurance relates. Statement 3: Premium deficiency arises when the unearned premium reserve is less than the estimated claims related expenses.
Only Statement 1 is correct
Only Statement 1 is incorrect
Only Statement 2 is correct
Only Statement 2 is incorrect
Only Statement 3 is correct
Only Statement 3 is incorrect
All statements are correct
All statements are incorrect
Q3. When Aliyah Corporation filed for liquidation with the Securities and Exchange Commission, it prepared the following statement of financial position:
Current Assets (net realizable value, $50,000) - $80,000
Land and Building (fair value, $240,000) - 200,000
Goodwill (fair value, 0) - 40,000
Total Assets - $320,000
Accounts Payable - $160,000
Mortgage Payable (secured by land & building) - 200,000
Ordinary share - 100,000
Accumulated profits - (140,000)
Total Liabilities and Equity - $320.000
What percentage of their claims are the unsecured creditors likely to get?
Q4. Antonio Company delivered 150 portable gas stoves to Devon Company on consignment. These stoves cost $2,700 each and could be sold for $4,500. The consignee is to be allowed a commission of 15% of the selling price. The agreement for the consignment contract stated that Antonio Company would draw a sight draft on the consignee for 60% of the cost of the stoves and the advance shall be recovered periodically by monthly deductions (in proportion to units sold) from the remittances which accompany the account sales. All expenses of the consignee are to be deducted monthly as incurred. The consignee rendered an Account Sales at the end of the first month showing among others, the following information: Advertising $6,750; Delivery Expense $3,375 and Commission $10,135. What amount is remitted by Devon to Antonio for the first month?
Q5. Alana Corporation signed a contract charging a customer $600,000 to change the windows of a customer's house. The contract includes costs for materials and labor. The company would charge $250,000 for materials if sold separately and $500,000 for labor if the customer will purchase the needed materials. What amount of the transaction price would the company allocate to its performance obligation to provide the needed services to the customer?