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Note 5 - Fiduciary Asset
6 Months Ended
Jun. 30, 2012
Note 5 - Fiduciary Asset:  
Note 5 - Fiduciary Asset

Note 5 – Fiduciary Asset

 

Fiduciary assets are cash balances held by a bank, mainly consisting of premiums collected from customers and payable to insurers, and claims received from insurers and payable to policyholders.

 

When the Company receives a premium from a customer, it debits the lump sum amount into one bank account and establishes a schedule to keep track of the amount of premium payable to the insurer.  At the monthly closing, the Company reclassifies the amount of premium payable to insurers as fiduciary assets.  Also, when the Company receives a claim on behalf of a policyholder, it debits fiduciary assets and credits claims payable and other payables, if necessary.  The fiduciary asset had a balance of $1,284,317 and $1,075,578 at June 30, 2012 and December 31, 2011, respectively.