Insurance Contract and BOT

Question 1

Scope of Insurance Contracts
- almost all insurance contracts (includes reinsurance contract)

Answer 1

Yes

Question 2

Out of Scope of Insurance Contracts
- Product warranties
- Employee benefits plans
- Contingent consideration
- Financial guarantee contracts

Answer 2

Yes

Question 3

In a direct insurance contract, 2 parties are present : Policyholder and Insurer
- equivalent of the 2 parties in reinsurance
- equivalent of the 2 parties in retrocession

Answer 3

• cedent and reinsurer
• retrocedent and retrocessionaire

Question 4

Revenue Recognition of Insurance Contract
- 1/24th Method → to provide a more accurate picture of the company’s financial health by matching revenue with the period of coverage and expected costs (XPN: Marine Cargo Insurance)

Answer 4

Yes

Question 5

Service Concession Arrangement / BOT

The grantor controls…
- during arrangement
- after arrangement

Answer 5

• DURING ARRANGEMENT : grantor controls / regulates what services operator must provide (to whom and at what price)
• END OF ARRANGEMENT : grantor controls any significant residual interest

Question 6

When to use
- Financial Asset Model

Answer 6

has unconditional right to receive specified amounts + shortfall

Question 7

When to use
- Intangible Asset Model

Answer 7

has right to charge for use

Question 8

Initial Measurement
- Financial Asset Model
- Intangible Asset Model

Answer 8

• FV
• FV

Question 9

Treatment of Borrowing Cost
- Financial Asset Model
- Intangible Asset Model

Answer 9

• expensed outright
• capitalized