I. Insurance accounting. Continue the preparation of the journal entries for the following transactions of ABC Life Insurance Company for the year ended December 31, 2020, using the manual of accounts provided on this lesson. 6 The Company's actuarial study reported an estimated P18,000,000 IBNR (incurred but not reported) Reserve 7 The Company has paid P100,000 in policy acquisition costs that will be deferred and then amortized over the life of the policy 8 The Company expenses half of the DAC recorded earlier this year. 9 The Company estimated loadings (premium taxes and commissions) for outstanding receivables as of year-end amounting to P650,000. 10 |Before the year-end, an unknown deposit to pay premiums of P2,000,000 was credited on its bank account. The Company is yet to investigate the details of the collection to credit the proper policyholder's account. Answers: No. Accounts Dr Cr 6 Claims Expense ? ? To accrue annual IBNR change ? Claims Expense To record amount recoverable from reinsurer (IBNR reserve) 7 Deferred Acquisition Costs (DAC)* ?To record acquisition costs that must be amortized over the policy period 8 Deferred Acquisition Costs (DAC) To record annual acquisition costs ? To record amount recoverable from reinsurer 9 Increase In Loading To record increase in loading as of year-end Cash To record collections from unidentified policyII. Risk Factors. Identify the relevant account's and assertion/'s affected by the following identified risk factors. Significant account/assertion(s) Risk Factor Type (Please write your answers on the space provided) Nature of the entity Continued erosion of surplus can lead to insolvency. Inherent risk Equity (Surplus/RBC requirement) Reserve redundancy, the difference between the statutory requirements Claim Reserves - and the economic reserve, can stall growth, limit returns and ultimately Inherent risk limit shareholder value. - C. M/V Insurers will continue to face litigation risks, including class-action - C, lawsuits, relating to their sales practices and market conduct, Inherent risk E/O, M/V particularly with regard to suitability, privacy and compliance with tax regulations. Contingent Liabilities - Business objectives, strategies, critical success factors and expectations of key stakeholders Underwriting Acquisition and Increased regulatory scrutiny will expose life insurers to greater General Expenses - scrutiny on their sales practices and market conduct, potentially Inherent risk exposing them to litigation. - C, R/O