Survivorship policy, Financial Accounting

Assignment Help:

SURVIVORSHIP POLICY

The partners may take out a survivorship policy to safeguard against future cashflow problems incase a partner dies or the business is dissolved. E.g. incase a partner dies, then the remaining partners may wish to continue business but they may experience cashflow problems because they have to pay the estate of the deceased partner.

On dissolution, again the partners may not be able to sell off all the assets on time and thus pay off the creditors.

Therefore, under a survivorship policy the insurance will pay the partners the sum assured on the death of a partner or the surrender value when the policy is terminated because the business is being dissolved.

The premiums paid on such a policy may be treated in several ways:

  • As an asset
  • As an expense and an asset

 


Related Discussions:- Survivorship policy

Managing organisations with multiple objectives, The difficulties associate...

The difficulties associated with managing organisations with multiple objectives To the level that an organisation faces a range of stakeholders then they also face multiple ob

Show the audit documentation, Q. Show the Audit Documentation? Audit Do...

Q. Show the Audit Documentation? Audit Documentation -Written record of the basis for AUDITOR's conclusions which provides the support for auditor's representations, whether th

Stock rights, Stock Rights - Stock rights are rights issued to stockholders...

Stock Rights - Stock rights are rights issued to stockholders of a CORPORATION which entitle them to purchase new shares of stock in the corporation for a stated price that is freq

expected range of returns, Series Arithmetic Mean Standa...

Series Arithmetic Mean Standard Deviation   Small-company stocks 15.9  % 32.8  %   Large-company

Accounting equation, Prove that accounting equation is satisfied in all the...

Prove that accounting equation is satisfied in all the following transactions of Mr.X 1.    Commenced business with cash - Rs.80,000                                    2.    Pu

Completely and incompletely constituted trusts, Completely and incompletely...

Completely and incompletely constituted trusts   In all cases the trust must be completely constituted.  A trust is completely constituted when the trust property has been vested

Expected opportunity loss decision criterion, The construction manager for ...

The construction manager for Acme, Inc. must decide whether to build single-family homes, apartments, or condominiums. She estimates annual profits will vary with the economy, as f

Prepare a cash budget, The following information for the six months ended 3...

The following information for the six months ended 31 December 2009 relates to the business of Mr N Morris: a) Opening cash (including bank) balance Rs 1,200 b) Production in unit

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd