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

Describe about financial intermediation, Q. Describe about Financial interm...

Q. Describe about Financial intermediation? Financial intermediation refers to the role of a bank or else other financial institution that serves to bring together lenders and

What is capital gain, Q. What is Capital Gain? Capital Gain - Portion o...

Q. What is Capital Gain? Capital Gain - Portion of total GAIN recognized on the sale or exchange of a no inventoryasset that isn't taxed as ORDINARY INCOME. Capital gains have

Balance sheet and income statement, 1) The detailed information is on the s...

1) The detailed information is on the second tab marked "Financials". Enter summarized Balance Sheet and Income Statement information for Cummins into the template on the "Summary

Preference share capital in subsidiary-group accounts, Preference share cap...

Preference share capital in subsidiary (irredeemable) Investment in preference shares does not lead to ownership and therefore, if the holding company owns part of the preference

Prepare the journal entries, Clarkston Inc issued $1,000,000 of convertible...

Clarkston Inc issued $1,000,000 of convertible 10- year, 11% bonds on July 1, 2014. The interest is payable semiannually on January 1 and July 1. The discount in connection with th

Retained Earnings and Capital, What happens to capital when a project is co...

What happens to capital when a project is completely funded by retained earnings?

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

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