Provisions And Contingencies

Question 1

What is the treatment for onerous contracts?

Answer 1

Provide at the lower of the charges to get out of the contract or the continuing costs of the contract

Question 2

Can you provide for reorganisation?

Answer 2

Only if:

1. Detailed plan announced BEOFRE year end
2. Do not include continuing costs after restructuring

Question 3

What is included in provision/contingency narratives?

Answer 3

1. Estimate of financial effect
2. Timings
3. Anticipated reimbursement

Question 4

Where there is a non adjusting event what do you disclose?

Answer 4

1. Nature

2. Estimate of financial effect

Question 5

What is the definition of a financial instrument?

Answer 5

Any contract that gives rise tic a financial asset in one entity and a financial liability or equity instrument in another