Document ID: chunk:federal_register_of_legislation:F2023C00382:front:0:p76
Version: federal_register_of_legislation:F2023C00382
Segment Type: other
Provision Reference: 
Character Range: 200134–203093

as set out in paragraph B125.
B123 Applying AASB 15, when an entity provides services, it derecognises the performance obligation for those services and recognises revenue. Consistently, applying AASB 17, when an entity provides services in a period, it reduces the liability for remaining coverage for the services provided and recognises insurance revenue. The reduction in the liability for remaining coverage that gives rise to insurance revenue excludes changes in the liability that do not relate to services expected to be covered by the consideration received by the entity. Those changes are:
(a) changes that do not relate to services provided in the period, for example:
(i) changes resulting from cash inflows from premiums received;
(ii) changes that relate to investment components in the period;
(iia) changes resulting from cash flows from loans to policyholders;
(iii) changes that relate to transaction-based taxes collected on behalf of third parties (such as premium taxes, value added taxes and goods and services taxes) (see paragraph B65(i));
(iv) insurance finance income or expenses;
(v) insurance acquisition cash flows (see paragraph B125); and
(vi) derecognition of liabilities transferred to a third party.
(b) changes that relate to services, but for which the entity does not expect consideration, ie increases and decreases in the loss component of the liability for remaining coverage (see paragraphs 47–52).
B123A To the extent that an entity derecognises an asset for cash flows other than insurance acquisition cash flows at the date of initial recognition of a group of insurance contracts (see paragraphs 38(c)(ii) and B66A), it shall recognise insurance revenue and expenses for the amount derecognised at that date.
B124 Consequently, insurance revenue for the period can also be analysed as the total of the changes in the liability for remaining coverage in the period that relates to services for which the entity expects to receive consideration. Those changes are:
(a) insurance service expenses incurred in the period (measured at the amounts expected at the beginning of the period), excluding:
(i) amounts allocated to the loss component of the liability for remaining coverage applying paragraph 51(a);
(ii) repayments of investment components;
(iii) amounts that relate to transaction-based taxes collected on behalf of third parties (such as premium taxes, value added taxes and goods and services taxes) (see paragraph B65(i));
(iv) insurance acquisition expenses (see paragraph B125); and
(v) the amount related to the risk adjustment for non-financial risk (see (b)).
(b) the change in the risk adjustment for non-financial risk, excluding:
(i) changes included in insurance finance income or expenses applying paragraph 87;
(ii) changes that adjust the contractual service margin because they relate to future service applying paragraphs 44(c) and 45(c); and
(iii) amounts allocated to the loss component