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What is liability adequacy test? how do you assess that?
in IFRS 4 - Insurance Contracts by

1 Answer

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An insurer is required to assess at the end of each reporting period whether its recognised insurance liabilities are adequate, using current estimates of future cash flows under its insurance contracts. If that assessment shows that the carrying amount of its insurance liabilities is not sufficient, the liability is increased and a corresponding expense is recognised in profit or loss.
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