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When we have virtually certain chances of outflow in Contingent liability we record as Provision (not as liability to show uncertainity).
When we have virtually certain chances of inflow in contingent asset we record as Asset.
Is it not violating Prudence concept?A provision is a liability.
No, it isn’t violating the prudence concept.
We only record contingent liabilities in the statements if they are resulting from a past events and if the payment is more than 50% likely, whereas we only record contingent assets in the statements if they are virtually certain (i.e. more than 95% likely). The reason for the difference in treatment is because of the prudence concept.
Have you watched the free lectures working through the IAS 37 chapter in our notes?
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