LRC under PAA Source Text Example Amortization of Acquisition Expenses
In the example "LRC under PAA - Source Text", for insurance service expenses the acquisition cash flows are amortized over the length of the contract (2 years). However, under profit/loss, the other expenses recognize all the acquisition expenses for the first year rather than amortizing it.
Is there a reason or explanation for this?
Comments
The expenses that are amortized are the directly attributable expenses while the ones that are in other expenses are the non-directly attributable ones. You can only amortize directly attributable expenses while non-directly attributable expenses are always incurred immediately. The idea is that any expenses that can be attributable to a policy should be expensed as they are earned, but with non-directly attributable expenses you're not able to pin them to any single policy which means you can't amortize them