TaxTMI 
TaxTMI 
Accounting Principles for Preparation & Presentation of Financial Statements
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....rance or re-insurance business shall prepare a detailed breakup of the revenue accounts on segmental basis in the manner as may be specified by the Authority. Provided that, the segmental reporting as given above shall be made by way of disclosure in the notes to the accounts for IIOs set up in a branch form. 3. Premium (1) Premium in respect of insurance contracts shall be recognized as income over the contract period or the period of risk, whichever is relevant. (2) A reserve for unearned premium shall be created as the amount representing that part of the premium written which is attributable to, and to be allocated to the succeeding accounting periods. (3) Unearned premium shall be shown separately under....
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....business. The liability shall include: - (i) Future payments in relation to unpaid reported claims; (ii) Claims Incurred But Not Reported (IBNR) including inadequate reserves (sometimes referred to as Claims Incurred But Not Enough Reported (IBNER)) which will result in future cash/asset outgo for settling liabilities against those claims. Explanation: Change in estimated liability represents the difference between the estimated liability for outstanding claims at the beginning and at the end of the accounting period. (3) The accounting estimate shall also include claims cost adjusted for estimated salvage value if there is sufficient degree of certainty of its realisation. 7. Actuarial Valuation of cl....
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....urities, which results in a decrease in the accounted value, the possible impact of the same on the balance sheet shall be disclosed in the 'Notes to Account'. (3) Listed Equity Securities and Derivative Instruments that are traded in active market: (i) Listed equity securities and derivative instruments that are traded in active markets shall be measured at fair value on the balance sheet date. Explanation: For the purpose of calculation of fair value, the lowest of the last quoted closing price in the stock exchanges where the securities are listed shall be taken. (ii) The IIO shall assess on each balance sheet date as to whether any impairment of listed equity security (ies)/ derivative(s) instruments ....
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....etween the re-measured fair value of the security/investment and its acquisition cost as reduced by any previous impairment loss recognised as expense in Revenue/Profit and Loss Account. Any reversal of impairment loss, earlier recognised in Revenue/Profit and Loss Account shall be recognised in Revenue/Profit and Loss Account. (4) Unlisted and other than actively traded Equity Securities and Derivative Instruments: Unlisted equity securities and derivative instruments and listed equity securities and derivative instruments that are not regularly traded in active markets shall be measured at historical cost. Provision shall be made for diminution in value of such investments. The provision so made shall be reversed in subsequent pe....
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....es where deliveries are pending; (ii) Sales where payments are overdue. (4) Extent of risk retained and reinsured in respect of insurance contracts. (5) Claims settled and remaining outstanding for a period of more than six months on the balance sheet date. (6) When the IIO applies an accounting policy retrospectively or makes a restatement of items in the financial statements or when it reclassifies items in its financial statements, the IIO shall attach to the Balance Sheet a restated "Balance Sheet" as at the beginning of the earliest comparative period with detailed schedules of the impacted areas. (7) The minimum assigned capital for an IIO in terms of the Act, shall be presented as a separa....