The Day 1 Profit Rule

An insurance company sells a 3-year insurance policy. They calculate that they will make a total net profit of $3,000 over the life of the contract. Under the old rules (IFRS 4), they might have recorded all $3,000 as profit immediately. Under IFRS 17, if they provide the service equally over the 3 years, how much profit should they recognize on their Income Statement in Year 1?

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