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Hi sir,
I always be in confusion which of theses two standards is examined
contingent liab / provision
And.
Financial liab/ in financial instruments
Could u plz guide me about the differences
Thanks
Hi,
With a contingent liability/provision we are accounting for uncertainty, i.e. the unknown in the future. Warranty provisions, provisions for damage are all unknown obligations.
With financial instruments there is no unknown as there is a legally binding contract between the two parties that gives known amounts. With a payable there is an amount stipulated in the contract, similar when we borrow money from a bank.investor.
Thanks
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