IFRS 4

Card Set Information

Author:
ED_6C3
ID:
270364
Filename:
IFRS 4
Updated:
2014-04-12 19:50:43
Tags:
6C
Folders:
Accounting
Description:
6C
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  1. Embedded derivatives
    • if derivative is itself an insurance contract, no need to separate and measure at fair value a policyholder’s option to surrender insurance contract.
    • exception if surrender value varies in response to change in a financial variable
  2. Unbundling of insurance and deposit component is required if
    • insurer can measure the deposit component separately (otherwise can’t unbundle)
    • insurer’s accounting policies do not otherwise require it to recognize all obligations and rights arising from the deposit component
    • permitted but not required if required to recognize all obligations and rights from deposit
  3. Changes in accounting policies
    • an insurer may change its accounting policies for insurance contracts if, and only if, the change makes the financial statement more relevant to the economic decision-making needs of users and no less reliable, or more reliable and no less relevant to those needs
    • current interest rates: permitted to change policy to remeasure current market value
    • continuation of existing practices: can continue to use undiscounted liabilities, measure contractual rights at amount exceeding fair value, use non-uniform accounting policies but can’t introduce those practices
    • prudence: no need to change accounting to eliminate excessive prudence; don’t introduce more either.
  4. Disclosure requirements
    • info that identifies and explains amounts arising from insurance contracts
    • info that enables users to evaluate the nature and extent of risks arising from ins. cont.
  5. Uncertain future event
    • whether an insured event will occur; OR
    • when it will occur; OR
    • how much the insurer will need to pay if it occurs

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