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hello sir very very embarrassing to ask you in this time ,but i need confidence ,i am confused about disclosure ,recognise and recorded ,especially in financial statement,please explain me about this
Hmmm! Interesting question for a P7 student!
:-)))
Recognition involves dealing with the numerical value of the item within the financial statements
Disclosure is where the numerical value is NOT incorporated within the financial statements but the matter is fully explained by way of disclosure note within the notes to the financial statements
Is that better?
In the area of contingencies, we would recognise a probable liability but would merely disclose a possible liability.
For the probable liability (where the chance of it crystallising is greater than the chance of it not crystallising) we would Dr statement of profit or loss with the reliably measurable amount and Cr a provision account
For the possible liability (where the chance of it crystallising is lower than the chance of it not crystallising) we would explain by way of disclosure note within the notes to the financial statements the circumstances that have given rise to this possible obligation
Better?
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