Ian-the Intern's Decision Tree Example

NycxBattleNycxBattle
edited April 13 in CIA.IFRS17-LRC

For example 2, how do we know that need to book an LC of 20?

The given information is LRC ex. LC = 80. and we know that LC = 20.

Why would we need to book an LC of 20 if the LC is already 20.

I understand that there is a discrepancy of 20 between LRC ex. LC and FCF, but we are given LC is already 20.

For example if LRC ex. LC = 80 and LC = 15 and FCF is 100, that would be different. Because that would imply LRC is 95 and FCF is 100 and there is a gap of $5

We know that the existing LC is 15 and we need to book 5 more for the LC and bring it to 20.

Is my understanding correct?

Comments

  • Staff-T1Staff-T1

    You're overthinking it. Its just a simple example and the LC was given as 20 so you did not have to calculate it. You'd need to book 20 if there is a gap between FCF and LRC excl LC

  • NycxBattleNycxBattle

    sounds good. I will just state the assumption I am assuming the LC of 20 has not been booked yet to be safe

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