So quick question I am taking my exam on Wednesday and I am having a crisis of confidence. I have been using NINJA for over a month and have about 110 hours in for study time. Have been feeling really good and I am trending in the 90's with test exams in the 80's.
However, I also have access to Wiley and was doing some multiple choice questions, and there are certain questions where the answers are different between NINJA and Wiley? How can this be? sure the numbers are different but the underlying concepts are the same.
The particular question in question that I noticed this on is:
From Wiley
On January 1, year 1, Ball, Inc. purchased a $1,000,000 ordinary life insurance policy on its president. The policy year and Ball’s accounting year coincide. Additional data are available for the year ended December 31, year 3.
Cash surrender value, 1/1/Y3 $43,500
Cash surrender value, 12/31/Y3 54,000
Annual advance premium paid 1/1/Y3 20,000
Dividend received 7/1/Y3 3,000
Ball, Inc. is the beneficiary under the life insurance policy. How much should Ball report as life insurance expense for year 3?
$ 6,500
$ 9,500
$17,000
$20,000
From NINJA
In 20X1, Chain, Inc., purchased a $1,000,000 life insurance policy on its president, of which Chain is the beneficiary. Information regarding the policy for the year ending December 31, 20X6, follows:
Cash surrender value (01/01/X6) $ 87,000
Cash surrender value (12/31/X6) 108,000
Annual advance premium paid (01/01/X6) 40,000
During 20X6, dividends of $6,000 were applied to increase the cash surrender value of the policy. What amount should Chain report as life insurance expense for 20X6?
A.
$40,000
B.
$25,000
C.
$19,000
D.
$13,000
In Wiley the answer is A $6,500, in NINJA it is C. $19,000. It would seem under Wiley's method NINJA's answer should be D, and under NINJA's method Wiley should be B. Is there something I am completely missing here? I feel like I can't trust what I've been learning for the past 2 months. Please help.
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