LRC excl. LC under PAA - Alice example
In the definiton of LRC excl LC under PAA at initial recognition:
- If there were acquisition cash payments that were chosen to be recognized as an expense, how would we consider them in the formula? Would we exclude those expenses?
Referring to Alice's example on LRC under PAA:
I don't understand how to treat the directly attributable expenses and the non-direclty attributable expenses at initial recognition, do we only remove directly attributable expenses, like in Alice's example? So in all cases do we only look at directly attributable expenses as part of the acquisition cash flows at initial recognition?
How do we consider the non-directly attributable expenses, are they considered in the LRC at subsequent measurement
I think I have a hard time understanding how the directly attributable expenses vs the non-directly attributable expenses are treated...
Comments
I think reading section 5.5 should clear it up for you
In the example, why do we recognize all the non-directly attributable acquisition expenses in the first year, but recognize the directly attributable acquisition expenses over 2 years?
They're both paid at inception and the example says "acquisition costs are deferred and amortized over the 2-year coverage period".
Thanks!
Directly attributable acquisition costs are always amortized. If you can't allocate it to a group of contract, how are you supposed to amortize it?
to get profit and loss, the insurance service result would be reduced by other non directly attributable expenses. if there is a loss, then that would equal to the loss component, and the loss component would be added to PAA LRC excl LC to get the LRC. So these non non directly attributable expenses would now be included in LRC. I thought that LRC only take into account expenses that are directly attributable. Am I misudnerstanding something?