FAR 5

Question 1

Gain contingencies

Answer 1

• only disclose if gain contingency is probable

- if reasonable possible or remote gain contingency, do not accrue or disclose

Question 2

Loss contingencies

Answer 2

• probable loss contingencies are accrued at minimum estimate amount
• reasonably possible loss contingencies are only disclosed with estimated range
• remote loss contingencies are neither accrued or disclosed

Question 3

Present Value of $1

Answer 3

• FV/ (1+r)^n

- or use PV table

Question 4

Future Value of $1

Answer 4

-PV * (1+r)^n

Question 5

PV of ordinary annuity

Answer 5

Annuity payment* PV of ordinary annuity from tables

Question 6

Effective Int method

Answer 6

• Int exp= carrying value at beg period * market int rate
• Amort of discount= int exp- int pmt
• Amort of Premium= int pmt- int exp