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If Joint Life Policy in the Balance Sheet at surrender value, then the firm will be
- a)Lose on the death of the partner
- b)Not get the value of Joint Life policy
- c)Gain on the death of the partner
- d)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partner
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
If Joint Life Policy in the Balance Sheet at surrender value, then the...
Explanation:
When a joint life policy is shown in the balance sheet at surrender value, it means that the policy has a cash surrender value that can be realized by the firm if it decides to surrender the policy before its maturity. In this scenario, the correct answer is option 'C' - the firm will gain on the death of the partner.
Reasoning:
To understand why the firm gains on the death of the partner when the joint life policy is shown at surrender value, let's consider the following points:
1. Surrender Value:
The surrender value of an insurance policy is the amount that the policyholder is entitled to receive if they choose to terminate the policy before its maturity. The surrender value is typically a percentage of the total premiums paid into the policy, minus any charges or fees.
2. Joint Life Policy:
A joint life policy is a type of insurance policy that covers the lives of two or more individuals, usually business partners. The policy pays out a death benefit upon the death of any of the insured individuals.
3. Gain on Death:
When a joint life policy is shown at surrender value in the balance sheet, it means that the firm has the option to surrender the policy and receive the surrender value. However, if one of the partners dies, the firm will receive a death benefit that is typically higher than the surrender value. This difference between the death benefit and the surrender value represents a gain for the firm.
Example:
Let's consider a hypothetical scenario where a firm has a joint life policy with a surrender value of $10,000. If one of the partners dies, the firm may receive a death benefit of $50,000. In this case, the firm would have a gain of $40,000 ($50,000 - $10,000).
Conclusion:
So, when a joint life policy is shown in the balance sheet at surrender value, the firm will gain on the death of the partner because the death benefit received upon the death of the partner is typically higher than the surrender value.
When a joint life policy is shown in the balance sheet at surrender value, it means that the policy has a cash surrender value that can be realized by the firm if it decides to surrender the policy before its maturity. In this scenario, the correct answer is option 'C' - the firm will gain on the death of the partner.
Reasoning:
To understand why the firm gains on the death of the partner when the joint life policy is shown at surrender value, let's consider the following points:
1. Surrender Value:
The surrender value of an insurance policy is the amount that the policyholder is entitled to receive if they choose to terminate the policy before its maturity. The surrender value is typically a percentage of the total premiums paid into the policy, minus any charges or fees.
2. Joint Life Policy:
A joint life policy is a type of insurance policy that covers the lives of two or more individuals, usually business partners. The policy pays out a death benefit upon the death of any of the insured individuals.
3. Gain on Death:
When a joint life policy is shown at surrender value in the balance sheet, it means that the firm has the option to surrender the policy and receive the surrender value. However, if one of the partners dies, the firm will receive a death benefit that is typically higher than the surrender value. This difference between the death benefit and the surrender value represents a gain for the firm.
Example:
Let's consider a hypothetical scenario where a firm has a joint life policy with a surrender value of $10,000. If one of the partners dies, the firm may receive a death benefit of $50,000. In this case, the firm would have a gain of $40,000 ($50,000 - $10,000).
Conclusion:
So, when a joint life policy is shown in the balance sheet at surrender value, the firm will gain on the death of the partner because the death benefit received upon the death of the partner is typically higher than the surrender value.
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If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer?
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If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer?.
If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Joint Life Policy in the Balance Sheet at surrender value, then the firm will bea)Lose on the death of the partnerb)Not get the value of Joint Life policyc)Gain on the death of the partnerd)Continue the Joint Life Policy in the Balance Sheet even after the death of any of the partnerCorrect answer is option 'C'. Can you explain this answer?.
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