Funds & Other Investments

Question 1

Represents the amount of cash to be received form the insurance company in case the life insurance is cancelled before the insured employee dies.

Answer 1

Cash Surrender Value

Question 2

Journal Entry: initial recognition of the cash surrender value?

Answer 2

Cash surrender value
Life insurance expense (for current year expense)
Retained Earnings (for prior year expenses)

Question 3

Procedure upon the death of the employee:

Answer 3

1. Update the balance of cash surrender value up to the date of death
2. Compute the gain on life insurance settlement

Question 4

Computation on gain on life insurance settlement

Answer 4

Proceeds received or receivable xx
Carrying Amount of CSV plus unexpired premium (xx)
Gain on life insurance settlement xx

Question 5

Cash surrender value is presented as?

Answer 5

Other long-term investment within non-current asset

Question 6

fund set aside to be used to settle long-term obligation, specifically, bonds payable.

Answer 6

Bond Sinking Fund

Question 7

classification of bond sinking fund that is currently maturing

Answer 7

Current Asset

Question 8

Fund for the retirement of share capital, usually preference shares.

Answer 8

Preference shares redemption fund

Question 9

Fund for the purchase or construction of additional plant

Answer 9

Asset Placement and Expansion Fund

Question 10

Fund for the payment of unforeseen obligations

Answer 10

Contingency Fund