Page 159 - IC26 LIFE INSURANCE FINANCE

PROVISIONS, CONTINGENT LIABILITIES AND

CONTINGENT ASSETS (AS 29)

Applicability

This Statement should be applied in accounting for provisions and contingent liabilities and in

dealing with contingent assets, except:

(a) those resulting from financial instruments that are carried at fair value

(b) those resulting from executory contracts

(c) those arising in insurance enterprises from contracts with policy-holders; and

(d) those covered by another Accounting Standard.

A provision is a liability which can be measured only by using a substantial degree of

estimation.

Recognition

A provision should be recognised when:

(a) an enterprise has a present obligation as a result of a past event;

(b) it is probable that an outflow of resources embodying economic benefits will be

required to settle the obligation; and

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