Assume that a $2 million factory is insured and sustains a $700,000 loss. If pro rata coverage exists in which the primary insurer retains 76 percent of the coverage and the reinsurer provides the remaining coverage, how much with the reinsurer pay?
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Assume that a $2 million factory is insured and sustains a $700,000 loss. If pro rata coverage exists in which the primary insurer retains 76 percent of the coverage and the reinsurer provides the remaining coverage, how much with the reinsurer pay?
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- 10. During 2021, Entity K purchased a franchise for P960,000. In addition, 5% of the revenue from the franchise must be paid to the franchisor. Revenue from the franchise for 2021 was P5,000,000. Entity K estimates the useful life of the franchise to be 10 years and takes full year's amortization in the year of purchase. The total franchise-related expenses is *Sunland Company self-insures its property for fire and storm damage. If the company were to obtain insurance on the property, it would cost them $1970000 per year. The company estimates that on average it will incur losses of $1610000 per year. During 2021, $705000 worth of losses were sustained. How much total expense and/or loss should be recognized by Sunland Company for 2021?Maureen Inc. is a dealer of machinery. On January 1, 2020, it leased a machinery to another entity under the following terms:· Annual rental payable at the end of each year: 1,500,000· Lease term and useful life of machinery: 5 years· Cost of machinery in Maureen’s books: 4,000,000· Fair value of machinery on commencement: 6,000,000· Guaranteed residual value upon return: 500,000· Implicit rate: 12%Relevant PV factors are: PV of ordinary annuity for 5 periods at 12% is 3.60 and PV of 1 for 5 periods at 12% is 0.57. Machinery will revert back to Maureen at end of lease term. Fair value of the asset on December 31, 2024 (end of lease) is 350,000. Maureen also incurred initial direct costs of P200,000. How much is the gross profit of Maureen on January 1, 2020? a. 1,800,000 b. 1,485,000 c. 1,685,000 d. 2,000,000
- Company A purchased company B for $50,000,000. Company B had net assets of $30,000,000, therefore $20,000,000 was paid in excess of the fair value of the net assets. What does this $20,000,000 premium paid by company A represent? In other words, what is this called?Scott Lloyds Inc. has the following two uncorrelated losses distributions: Liability Loss = $100 million with probability 0.50 $ 10 million with probability 0.50 Property Loss - $60 million with probability 0.10 $30 million with probability 0.90 Scott Llyods has the ability to retain losses up to $80 million. It purchases two coverage with a $40 million deductible for the coverage of liability losses and a $40 million deductible for the coverage of property losses. Calculate the average unnecessary coverage.In 2018, KIKO Company purchased P5,000,000 life insurance policy on its president and chief executive officer, of which KIKO Company is the beneficiary. Information regarding this policy for 2021 is as follows: Cash surrender value, January 1 P100,000 Annual premium paid on Jnauary 1 200,000 Dividends earned on the policy 20,000 The dividends were applied to increase the cash surrender value. If the life insurance expense reported by KIKO Company in 2021 was P160,000, what is the cash surrender value on December 31?
- HULK Corporation declared on December 1, 2021 its 10 brand new fleet of cars costing ₱500,000 each as property dividends to be distributed on February 1, 2022 to its ten shareholders. The following fair value less cost to distribute of the cars was determined to be: December 1, 2021 - ₱4,800,000; December 31, 2021 - ₱4,500,000; February 1, 2022 -₱4,000,000. What is the loss on distribution of property dividend to be recognized on February 1, 2022? ₱ 0 ₱ 500,000 ₱ 800,000 ₱ 200,000On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyer-lessor) for cash of $ 2,000,000. The fair value of the building at that time is $ 1,800,000; the carrying amount immediately before the transaction is $ 1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 18 years, with annual payments of $ 120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of $ 1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under IFRS 16 (Leases). Task: Discuss the implication of the transactions and state the journal entries on January 1, 2020On Jan. 1, 2010, ABC entered into an insurance contract covering the life of its founder. The P100,000 annual insurance premium is payable at the start of the year. By the end of the fifth year, the insurance will have a cash surrender value and it was as follows for the following years:Year Cash Surrender Value2014 P80,0002015 100,0002016 130,0002017 180,000 Continuing from the previous number and assuming further that P3,000,000 was received from the insurance, what is the journal entry to record the gain on settlement and make the final adjustment to the insurance expense?
- On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor) for cash of $2,000,000. The fair value of the building at that time is $1,800,000; the carrying amount immediately before the transaction is $1,000,000. At the same time, TomCo enters into a contract with MacCo for the right to use the building for 19 years, with annual payments of $120,000 payable at the end of each year. The interest rate implicit in the lease is 4.5%, which results in a present value of the annual payments of $1,459,200. The transfer of the asset to MacCo has been assessed as meeting the definition of a sale under PSAK 72. Discuss the implication of the transactions and state the journal entries on January 1, 2020HULK Corporation declared on December 1, 2021 its 10 brand new fleet of cars costing ₱500,000 each as property dividends to be distributed on February 1, 2022 to its ten shareholders. The following fair value less cost to distribute of the cars was determined to be: December 1, 2021 - ₱4,800,000; December 31, 2021 - ₱4,500,000; February 1, 2022 -₱4,000,000. What is the carrying amount of the asset held for distribution on December 31, 2021?A has an investment property acquired at a cost of P2,000,000. Depreciation is estimated to be P50,000 annually and a periodic repair costs of P15,000 per year as well as property tax of P5,000 are incurred by the company on an annual basis. The fair value of the investment property before taxes and repairs amounts to P2,100,000 at year end. What is the carrying value of A's investment property on December 31, 2021 considering that the fair value model is used?
