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

Compute the total of amount of assets, Balance Sheet Classifications and Re...

Balance Sheet Classifications and Relationships: Shelley and Co. has the following balance sheet elements as of December 31, 2012. Land. . . . . . . . . . . . . . . . . . . . . . .

Revenues and production budget, The assignment requires a significant part...

The assignment requires a significant part of the work to be done in a spreadsheet. I have not nominated any particular vendoar or any particular version. The choice is up to you,

Illustration of accounting treatment of deferred tax, Illustration of Accou...

Illustration of Accounting treatment of deferred tax A Ltd., bought an item of plant at a cost of £100,000 in year 2000. The estimated useful life of the plant was 5 years and

Explain a reduction in expected inflation - prices and wages, Assume that p...

Assume that prices and wages adjust rapidly so that the markets for labor, goods, and assets are always in equilibrium. What are the effects of each of the following on real money

Capita expenditure and revenue expenditure, Sema pic, a company in the heav...

Sema pic, a company in the heavy engineering industry, carried out an expansion programme in the 2016 financial year, in order to meet a permanent increase in contracts. The compan

Admission of a new partner, Admission of a new partner When a new partn...

Admission of a new partner When a new partner joins the firm/partnership, the new partner will enjoy the benefits arising as a result of goodwill created by the old existing pa

Financial ratio assignment, Critical Thinking Exercise Instructions: select...

Critical Thinking Exercise Instructions: select a company , Wendy''s or McDonald''s . Perform a Google search, key in McDonalds or Wendys Key financial ratios. I suggest you use f

Illustration for preparing final accounts, Illustration for preparing final...

Illustration for preparing final accounts K Ltd established a branch in Arusha Tanzania on 1.1.X2, when Kshs 1 = TShs 15. PPE costing Kshs 800,000 were purchased on that day. I

Accounting policies-notes to the accounts, Accounting Policies These fina...

Accounting Policies These financial statements have been prepared under the historical cost basis of accounting which is modified to accommodate the revaluation of certain proper

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