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Flashcards in SSAP 5 Deck (9)
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1

3 components of liabilities

1. Present responsibility to transfer/use assets at a specified/determinable date based on the occurrence of a specified event/on demand
2. The entity has little/no discretion to avoid the responsibility
3. The transaction/event that obligates the entity has already occurred

2

Define "loss contingency"/"asset impairment"

An existing condition involving uncertainty as to possible loss that will ultimately be resolved when one or more future events occur or fail to occur

3

2 necessary criteria to charge a loss contingency/asset impairment to operations

1. Information prior to the issuance of the financial statements indicates that the assets has been impaired/liability incurred at the date of the financial statements
2. The amount of the loss can be reasonably estimated

4

How should management book the reserve if there is a range?

-If a particular amount within the range appears to be a better estimate, that amount should be booked
-If no amount in the range appears to be better than the others, the midpoint should be booked

5

How should management book the reserve if there is no range?

The best estimate should be booked

6

Criteria to make a disclosure about loss contingency/asset impairment

-A contingency/asset impairment is not recorded because only one of the two conditions is met
-There is an exposure to loss higher than the amount accured

7

2 disclosures that need to be made regarding loss contingency/asset impairment

1. Nature of the contingency
2. Estimate of the possible loss/range of loss; or a statement that such an estimate can not be made

8

Disclosures that the insurer needs to make if the contingency involves a guarantee

-Nature & amount of the guarantee
-Approximate term
-How the guarantee arose
-The events that would require the guarantor to perform under the guarantee
-The current status

9

Disclosures that need to be made for each joint & several liability arrangement

-Nature of the agreement
-Total outstanding amount under the arrangement
-Carrying amount of the insurers liability, and carrying amount of the receivable recognized
-Nature of any recourse provisions that would enable recovery from other entities of the amounts paid, including any limitations of the amount that may be recovered
-In the period where the liability was initially recognized & measured, or the period in which the measurement changes significantly: the corresponding entry/where the entry was recorded in the financials