International Financial Reporting Standards (IFRS)

IFRS for Small and Medium-sized Entities (SMEs)
Section 21: Provisions and Contingencies

1. Provision
--> liability whose timing or amount is not certain

2. Provision is recognised when (1), (2), (3) are met
(1) present obligation from past event
(2) transfer of resources is probable
(3) amount can be reliably estimated

3. Contingent liability is one of the following:
(1) uncertain, but possible, obligation --> not present obligation
(2) transfer of resources is not probable
(3) amount cannot be reliably estimated

4. Contingent liability is
--> not recognised as a liability
--> except for (A) in business combination
--> (A) the provision for an acquiree's contingent liabilities

5. Contingent asset is
--> not recognised as an asset.