Page 175 - Finac1 Test 4 Slides

PROVISIONS, CONTINGENT LIABILITIES AND ASSETS

Introduction – IAS 37

• The most important aspect in this learning unit is to

determine whether an item is a provision or a

contingent liability.

• A provision complies with the definition of a liability (a
current obligation), except that the timing or amount is

uncertain.

• A contingent liability is a possible obligation whose

existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events

or a present obligation that is not recognised because:

• an outflow of resources is not probable; or

• the amount cannot be measured with sufficient reliability.

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