Government charges levied on the insurer may be required to be paid while the revenue that they relate to remains unearned.In this case the appropriate accounting treatment in the books of the insurer is to treat the levies paid as:

Question

Quizplus · Accepted Answer

Since the revenue related to the levies is unearned, the levies paid are considered a prepayment and should be treated as an asset until the related revenue is earned. Once the revenue is earned, the prepayment can be recognized as an expense.

Government Charges Levied on the Insurer May Be Required to Be