IAS 37: Provisions, Cintingent Liabilities And Assets Flashcards
What is e recognition criteria of a liability?
- Probable FOF
2. Reliably measured
What are the elements of the definition of a liability?
- Present obligation
- Resulting from past event
- Results in expected future economic outflow
What is the difference between a provision and a liability?
A provision’s amount and timing are uncertain and therefore an estimation is used in place
How is a contingent liability different from a provision?
The FOF is not probable. So it will not be recognized, but it will be disclosed.
Also the measurement cannot be reliably measured
If a contingent liabilities probability is remote, will it be disclosed?
No
There is too little possibility for it to occur to make any decisions
How is a contingent liability disclosed?
In the notes to the FS Nature (why) Estimations of; - Probability - Timing
What are the elements of the definition of an asset?
- Controlled resource
- Resulting from past event
- Expected FIF
What is the recognition criteria for assets?
- Probable inflow economic benefits
2. Reliably measured
What is a contingent asset?
A POSSIBLE asset
E.g. If you sue someone, it is possible there will be an inflow, no necessarily probable though
How is a contingent asset disclosed?
In the notes Nature Estimation in rand Timing Probability
What are the four parts to provisions?
- Definition
- Recognition
- Subsequent measurements
- Disclosure
What is the definitions of a provision?
- Liability: legal or constructive
2. Uncertain: timing and amount
When can a provision be recognized?
- Probable outflow
2. Reliable estimate of timing and amount
Journal entry to raise a provision?
Dr. Expense (P/L)
Cr. Provision SOFP
When the provision is initially raised, what amount is used?
The discounted rate to present value
