lAS 37 rovlslons ConLlngenL AsseLs

and ConLlngenL llablllLles

Ob]cetIvc: 1o ensure approprlaLe recognlLlon and measuremenL
of provlslons conLlngenL asseLs and llablllLles
PvIneIpIc: 1he key prlnclple esLabllshed by Lhe SLandard ls LhaL a
provlslon should be recognlzed only when Lhere ls a llablllLy le a
presenL obllgaLlon resulLlng from pasL evenLs
key Def|n|t|ons
rov|s|on a llablllLy of uncerLaln Llmlng or amounL
L|ab|||ty presenL obllgaLlon as a resulL of pasL evenLs seLLlemenL ls
expecLed Lo resulL ln an ouLflow of resources (paymenL)
CrlLerla for 8ecognlLlon
W ecogn|t|on of a rov|s|on
An enLlLy musL recognlze a provlslon lf and only lf
a presenL obllgaLlon (legal or consLrucLlve) has arlsen as a
resulL of a pasL evenL
paymenL ls probable (more llkely Lhan noL) and
Lhe amounL can be esLlmaLed rellably
WhaL ls Lhe double enLry for a provlslon?
W Dr locome 5totemeot (xpeose Acc)
W r 5totemeot of lloooclol losltloo (lloblllty Acc)
ConLlngenL llablllLy
W ont|ngent ||ab|||ty a posslble obllgaLlon dependlng on
wheLher some uncerLaln fuLure evenL occurs or a
presenL obllgaLlon buL paymenL ls noL probable or Lhe
amounL cannoL be measured rellably
Always dlsclosed ln Lhe noLes never on Lhe face of Lhe
lln SLaLemenLs
Cnly ulsclosed lf
W CbllgaLlon may exlsL due Lo pasL evenL
W 1lmlng or amounL are uncerLaln
lf Lhe chances of an ouLflow are remoLe do nC1
dlsclosed
ConLlngenL AsseL
W ont|ngent asset a posslble asseL LhaL arlses from pasL
evenLs and whose exlsLence wlll be conflrmed only by
Lhe occurrence or nonoccurrence of one or more
uncerLaln fuLure evenLs noL wholly wlLhln Lhe conLrol of
Lhe enLlLy
W ConLlngenL AsseLs
Should noL be recognlzed buL should be dlsclosed
Cnly ulsclose lf
W lnflow of economlc beneflL ls probable (30+)
When Lo 8ecognlze ulsclose or noL ulsclose?
nf|ow or Cutf|ow of cash ont|ngent L|ab|||t|es ont|ngent Assets
erta|n 9S rovlde (rovlslon) 8ecognlze
robab|e S0 9S rovlde (rovlslon) ulsclose by noLe
oss|b|e S S0 ulsclose by noLe no ulsclosure
emote S no dlsclosure no ulsclosure