CERTYNEX IFRS ACADEMY

A trainee calculates the fulfilment cash flows of a group: present value of outflows of 2,000 euros, present value of inflows of 3,000 euros (case data). The trainee writes: "Fulfilment cash flows = 2,000 − 3,000 = −1,000 euros." The group's risk adjustment for non-financial risk is 400 euros (case data). What is the error in this calculation?

It discounts the inflows, although they should not be discounted, so the correct result is −1,000 euros.

It omits the risk adjustment for non-financial risk: the correct result is −600 euros.

It forgets to add the contractual service margin, so that the correct result is −600 euros.

It compares present values, whereas fulfilment cash flows are calculated on nominal amounts that are not discounted.