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For those items which do not fill
R(reliable estimate)
O (present legal or constructive obligation)
T( cash expected to transfer out)criterias for provisions are to be recorded as contingent liabilities if they are probable. Suppose I have a legal suit to compensate a party which is probable but the amount can’t be reliably estimated.
Then how can i record it as contingent liability when the amount is not reliable?
Either I am confused to this topic or the IAS is confusing.
If the probability is greater than 50% that an obligation will arise, then it should be provided for ie the amount is reflected in the Financial Statements as a liability / provision
The exception to this is that, even though probability is, for example, >97%, if the amount involved is not capable of reliable measurement, then we cannot provide.
Instead, we make a disclosure note about the event, its occurrence, the fact that no quantification is reflected and the reason WHY we are not able to quantify
OK?
1) Provisions is not a category of contingent liability. Only they have the same IFRS.
2) Contingent liability is not recorded, only disclosed.
3) Contingent liability are basically for future events and rarely for present events which do not have reliable measurements.
4) Deferred consideration is not the same as contingent liability.
Sir, are my statements true?
and under ifrs 3 all contingent liabilities are recognised at fair value at acquisition date
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