27 August 2016
When would an insurance company recognize the premium received on insurance?Example- if premium is received in dec2015 for the year 2015 when will the insurance co. Recognise it?what will be the treatment of insurance premium payed in the books of person who payed it?
28 August 2016
Dear Palak,
For individuals it will be treated as drawing( taking example of life insurance premium)
Life insurance premium..... Dr
To Cash
kindly like if my response has helped you
31 August 2016
Dear Palak,
Your query was what will be the treatment of insurance premium payed in the books of person who payed it and we have given the answer taking individual as a example.
Further for insurance company revenue recognision detail is mentioned below..
In insurance company there are two types of contacts short term and long term.
In short term contact insurance company can recognize revenue in relation to the time expired on the agreement.
Further for Long contact contact revenue can be recognised on due basis whether the premium is received or not.
Hope your query is resolved
Kindly like if my response has helped you
CAclubindia
