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10. Entity A writes a single policy for a P100,000 premium and expects claims to be made of P60,000 in 2013. At the time of
10. Entity A writes a single policy for a P100,000 premium and expects claims to be made of P60,000 in 2013. At the time of writing the policy, there are commission costs of P20,000. Assume a discount rate of 3% risk free. The entity says that if a provision for risk and uncertainty were to be made, it would amount to P25,000 and that this risk would expire evenly over years 2011, 2012, and 2013. Under existing policies, the entity would spread the premiums, the claims expense and the commissioning costs over the rst two years of the policy. Investment returns in years 2010 and 2011 are P2,000 and P4,000 respectively. What is the prot in year 2010 and 2011, using the matching and deferral approach in years 2010 and 2011? 2011 2010 2011 2010 a. 12,000 14,000 C. 14,000 12,000 b. 0 26,000 d. 0 26,000
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