Difference between revisions of "NAIC.SSAP-5R"
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| + | '''Reading''': Statement of Statutory Accounting Principles 5R, “'''Liabilities, Contingencies and Impairment of Assets''',” paragraphs 1-12, 30-33, and 37-38 | ||
| + | '''Author''': National Association of Insurance Commissioners, Accounting Practices and Procedures Manual | ||
| + | [https://www.battleacts6us.ca/vanillaforum6us/categories/naic-ssap-5r<span style="font-size: 12px; background-color: lightgrey; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 0px;">'''Forum'''</span>] | ||
| − | == | + | {| class='wikitable' style='background-color: navajowhite; |
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| + | || '''BA Quick-Summary''': <span style="color: green;>'''Accounting Principles - Liabilities, Contingencies and Impairment of Assets'''</span> | ||
| + | '''Paragraphs 1 - 12''': | ||
| + | * This section defines statutory accounting principles for liabilities, contingencies, and impairments of assets. A '''liability''' is characterized by a present duty to transfer assets or provide services due to past transactions, and it must be recorded in financial statements when incurred. For joint and several liabilities, the total obligation should be reported as the sum of agreed payments and any additional expected amounts, while '''loss contingencies''' and '''impairments''' must be recorded if the loss is probable and can be reasonably estimated. | ||
| − | + | '''Paragraphs 30 - 33''': | |
| + | * This section mandates '''disclosures''' for joint and several liability arrangements, loss contingencies, and guarantees, even if the possibility of loss is remote. These disclosures must include the nature, terms, amounts, and potential recoveries related to these liabilities to ensure transparency in financial statements. | ||
| − | + | '''Paragraphs 37 - 38''': | |
| + | * This very short section mentions the requirement for financial statements to '''disclose the nature of any gain contingency''' while avoiding misleading implications about the likelihood of realization. | ||
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| − | + | ==Study Tips== | |
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| − | + | The year of publication for the manual changes each year but the content generally does not. We will let you know if there is a major change. | |
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| − | + | * <span style="color: red;">'''2022-Fall:'''</span> There was 1 very minor update that is noted further down. | |
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| − | + | This is a reading where your best strategy is to play the odds. In other words, skip it unless you've already learned the top 24 readings very, very well. It contains definitions for several terms that ''<u>seem</u>'' important, but none has ever been asked. If I were studying for this exam, I would blow it off. Worst case scenario: there's a 1.0-point question and you take an educated guess. | |
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| − | + | ==BattleTable== | |
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| − | + | * ''this reading has not been tested on any exam from the year 2012 to Fall 2019 when the exams stopped being published.'' | |
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| + | : {| class="wikitable" style="width: 1000px;" | ||
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| − | | | + | ! style="width: 175px;" | reference !! part (a) !! part (b) !! part (c) !! part (d) |
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| − | | | + | || ''no prior questions'' |
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| − | + | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=NAIC&suffix=SSAP-5R§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> | |
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| − | + | ==In Plain English!== | |
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| − | | | + | | '''Question''': identify the <u>components</u> of a liability |
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| − | + | * responsibility to '''transfer assets''' upon occurrence of a specified event | |
| − | + | * responsibility cannot be avoided | |
| − | + | * event has occurred | |
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| + | {| class='wikitable' | ||
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| − | | | + | | '''Question''': define <u>loss contingency</u> or <u>asset impairment</u> and identify the 3 levels |
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| − | + | * a '''condition''' involving uncertainty regarding amount of loss | |
| + | * resolved when future event occurs ''or'' fails to occur | ||
| + | * '''levels''': | ||
| + | : - probable ''(likely to occur)'' | ||
| + | : - reasonably possible ''(between probably and remote)'' | ||
| + | : - remote ''(slight chance of occurring)'' | ||
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| + | | '''Question <span style="color: red;">(new for 2022-Fall)</span>''': if a financial instrument has characteristics of both liabilities and equity then how should it be reported in financial statements | ||
| + | |} | ||
| − | + | * as a '''liability''', to the extent the instrument embodies an unconditional obligation of the issuer | |
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| − | + | That's about it. Here's the quiz... | |
| − | == | + | [https://www.battleacts6us.ca/FC.php?selectString=**&filter=both&sortOrder=natural&colorFlag=allFlag&colorStatus=allStatus&priority=importance-high&subsetFlag=miniQuiz&prefix=NAIC&suffix=SSAP-5R§ion=all&subSection=all&examRep=all&examYear=all&examTerm=all&quizNum=all<span style="font-size: 20px; background-color: lightgreen; border: solid; border-width: 1px; border-radius: 10px; padding: 2px 10px 2px 10px; margin: 10px;">'''Full BattleQuiz]'''</span> <span style="color: red;">'''You must be <u>logged in</u> or this will not work.'''</span> |
Latest revision as of 18:11, 25 July 2024
Reading: Statement of Statutory Accounting Principles 5R, “Liabilities, Contingencies and Impairment of Assets,” paragraphs 1-12, 30-33, and 37-38
Author: National Association of Insurance Commissioners, Accounting Practices and Procedures Manual
| BA Quick-Summary: Accounting Principles - Liabilities, Contingencies and Impairment of Assets
Paragraphs 1 - 12:
Paragraphs 30 - 33:
Paragraphs 37 - 38:
|
Study Tips
The year of publication for the manual changes each year but the content generally does not. We will let you know if there is a major change.
- 2022-Fall: There was 1 very minor update that is noted further down.
This is a reading where your best strategy is to play the odds. In other words, skip it unless you've already learned the top 24 readings very, very well. It contains definitions for several terms that seem important, but none has ever been asked. If I were studying for this exam, I would blow it off. Worst case scenario: there's a 1.0-point question and you take an educated guess.
BattleTable
- this reading has not been tested on any exam from the year 2012 to Fall 2019 when the exams stopped being published.
reference part (a) part (b) part (c) part (d) no prior questions
Full BattleQuiz You must be logged in or this will not work.
In Plain English!
| Question: identify the components of a liability |
- responsibility to transfer assets upon occurrence of a specified event
- responsibility cannot be avoided
- event has occurred
| Question: define loss contingency or asset impairment and identify the 3 levels |
- a condition involving uncertainty regarding amount of loss
- resolved when future event occurs or fails to occur
- levels:
- - probable (likely to occur)
- - reasonably possible (between probably and remote)
- - remote (slight chance of occurring)
| Question (new for 2022-Fall): if a financial instrument has characteristics of both liabilities and equity then how should it be reported in financial statements |
- as a liability, to the extent the instrument embodies an unconditional obligation of the issuer
That's about it. Here's the quiz...
Full BattleQuiz You must be logged in or this will not work.
