Prepaid expenses ssap 29

edited March 2023 in Odomirok.18-IEE
Hello, i looked into ssap 29 since prepaid expenses are discussed in this IEE section. Ssap 29 states "This statement does not address accounting for deferred policy acquisition costs and other
underwriting expenses, income taxes, and guaranty fund assessments." I am very confused on this as prepaid expenses have been defined in this section to be the sum of commission and brokerage, taxes licenses and fees, other acqusition, field supervison..., and half of general expenses. I thought other UW expenses included commission brokerage, taxes&licenses, other acquisition and general expenses. Could you help me understand this apparent contradiction that prepaid expenses don't include other underwriting expenses?

Comments

  • Where exactly do you find the prepaid expense formula? I don't see it in the IEE section.

  • It actually comes from the Odomriok source text on IEE the relevant paragraphs is
    "The ratio that is used to determine the amount of unearned premium reserves representing prepaid expenses is calculated for each line of business separately. It is the ratio of net acquisition expenses to net written premiums (column 1). Net acquisition expenses are calculated as the sum of commissions and brokerage expenses incurred (column 23); taxes, licenses and fees incurred (column 25); other acquisition, field supervisions and collection expenses incurred (column 27); and half of the general expenses incurred (50% of column29). " -page 235 of Odomriok.

  • I think it simply means standard 29 addresses prepaid expenses alone. Yes, these other items are used in the calculation of prepaid expense, but this particular standard is not for the accounting of these other elements.

  • Sweet thank you

  • Sure, good luck.

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