IFRS 17Chapter 3Lesson 2
The contractual service margin, the onerous group and acquisition cash flows
Step 1 of 7Learning objectives
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A profitable group holds its expected profit back in the contractual service margin; an onerous group recognises its loss straight away; acquisition cash flows reduce the margin.
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Learning objectives
- Explain that the margin is set so that no income or expense arises at initial recognition.
- Calculate the initial margin of a profitable group from given cash flows and risk adjustment.
- Calculate the initial loss of an onerous group and post the corresponding entry.
- Explain how acquisition cash flows are allocated and why they reduce the margin.