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

Cost of Loan, Given information: Offered a $20 million commercial loan pri...

Given information: Offered a $20 million commercial loan priced using a 3month LIBOR index+100bp. After some preliminary research, using a money center bank''s swap trading desk

Which is not necessary in order for corporation to pay cash, Q. Which one o...

Q. Which one of the following is not necessary in order for a corporation to pay a cash dividend? a. Adequate cash b. Approval of stockholders c. Declaration of dividends by the bo

Assingment, Can you do the attached quections by Monday?

Can you do the attached quections by Monday?

Rectification of errors, sale of 430 to ramdas were credited in his account...

sale of 430 to ramdas were credited in his account 340

What should be didde''s 2011 earnings per common share, Didde Co. had 300,0...

Didde Co. had 300,000 shares of common stock issued and outstanding at December 31, 2010. No common stock was issued during 2011. On January 1, 2011, Didde issued 200,000 shares of

Correction of errors, How to treat them both which affect the trial balance...

How to treat them both which affect the trial balance and which dont affect the trial balance

Market risk premium , A company presently pays a dividend of $2 per share, ...

A company presently pays a dividend of $2 per share, D0 = 2. It is estimated that the company's dividend will enhance at a rate of 17% percent per year for the next 2 years, then t

What is exposure draft, Q. What is Exposure Draft? Exposure Draft - Doc...

Q. What is Exposure Draft? Exposure Draft - Document issued by AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA), FINANCIAL ACCOUNTING STANDARDS BOARD (FASB), GOVERNME

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