IFRS 17-PAA Flashcards

1
Q

Describe the Carrying Amount for LRC using PAA (calculated at initial recognition).

A
  • premiums received (at initial recognition)
  • MINUS acquisition cash flows at that date (unless they are already expensed)
  • PLUS any assets for acquisition cash flows derecognized MINUS liabilities previously recognized
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Identify differences between GMA and PAA for calculating LRC. (3)

A
  • PAA is simpler
  • PAA doesn’t require estimation of FCFs (Fulfilment Cash Flows)
  • PAA doesn’t require a CSM (Contractual Service Margin)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Is a group of PAA eligible if an insurer expects significant variability in the FCFs?

A

No, this disqualifies the use of PAA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How can you determine if LRC using PAA differs materially from LRC using GMA?

A

Quantitative assessment:
- calculate using PAA and GMA; then verify that the difference is less than the materiality threshold
Qualitative assessments:
- assess a similar group of contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

If a group of onerous contracts is PAA eligible, what further adjustment to LRC is required?

A
  • must add a ‘loss component’ (LC)

- loss component = (LRC using GMA) - (LRC using PAA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly