International Financial Reporting Standards (IFRS) by IFRSclass.com

IFRSclass.com^TM

U.S. GAAP Codification

IFRS International Standards

Accounting Standards, ASC

International Accounting Standard (IAS) 37
Provisions, Contingent Liabilities and Contingent Assets

U.S. GAAP Codification, IFRS, IFRS News and Updates, IFRS for SMEs

Principles of Accounting, Intermediate Accounting, Accounting Textbooks

Securities Law Library, U.S. Tax Code by Section, IFRS Dictionary

IFRS Accounting Topics

International Accounting Standard (IAS) 37

IAS 37

Provisions, Contingent Liabilities and Contingent Assets

Issued in September 1998

Recent amendment: by IFRS 3 revised in January 2008

What is a provision?
--> a liability that has uncertain timing or uncertain amount

A provision is a liability.

Provisions are recognised only if the following conditions are met:
      (1) a present obligation exists
      (2) it is probable that outflow of resources is required
      (3) the amount of obligation can be reasonably estimated

What is a contingent liability?
--> a possible obligation that will be confirmed
by uncertain future events.

A contingent liability is not recognised in the financial statements.

Disclosure of a contingent liability

      (1) if the possibility of outflow in settlement is remote
            --> disclosure is not required

      (2) if the possibility of outflow in settlement is not remote
            --> disclosure is required

What is a contingent asset?
--> a possible asset that will be confirmed
by uncertain future events.

A contingent asset is not recognised in the financial statements.

Disclosure of a contingent asset

      (1) if an inflow of economic benefits is probable
            --> disclosure is required

      (2) if an inflow of economic benefits is not probable
            --> disclosure is not required

IAS 37 Technical Notes