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

Difference between npv and irr, Function to return the phase of a complex n...

Function to return the phase of a complex number 1. What is Annuity kind of cash flow? 2. What do understand by Portfolio risk? 3. What do you understand by 'Loan Am

Written inquiries for financial information, Q. Written inquiries for finan...

Q. Written inquiries for financial information? Inquiry - A procedure which comprises seeking information both financial and non-financial, of knowledgeable persons throughout

Estimate comparative advantage, The only two countries in the world, Alpha ...

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers (all units measured in tons). Alpha's Production PossibilitiesFrontier

Amount of depreciation expense , In January 2011, Rogers Co. purchased a ma...

In January 2011, Rogers Co. purchased a machine that cost $85,000. The equipment is estimated to have a 5-year life and a salvage value of $15,000. a) Compute the amount of depr

Capital recovery factor, Equation illustrates the relationship in between P...

Equation illustrates the relationship in between PVA n , A, K and n. So manipulating this a bit: We find that A = PVA n [(k (1 + k) n )/((1 +k) n - 1)] [(k (1 + k) n )/(

Journalizing, ABC Corportation purchased $15,000 of office furniture by put...

ABC Corportation purchased $15,000 of office furniture by putting down $7000 soqn in cash and the rest on accout

Good will on consolidation-consolidated balance sheet, Good will on consoli...

Good will on consolidation Good will on consolidation arises when the purchase consideration paid by the holding company is different from the value of the net assets acquired i

Cash flow statement, In additional information depreciation of two years is...

In additional information depreciation of two years is given. What is the treatment of it while preparing fixed assets account.

It is started as "the MATCHING principle is very important w, What is the r...

What is the relation of profit and matching principle? Do you have a form for this kind of assignment in writting Financial Accounting?

Cost estimation, 1a. Explain why it is the case that the value of intermedi...

1a. Explain why it is the case that the value of intermediate goods produced and sold during the year is not included directly as part of GDP, but the value of intermediate goods p

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