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ACCA f3 BPP book 2017 stated Contingent liabilities as follow:
Contingent liabilities should not be recognised in financial statements but they should be disclosed in the notes. The required disclosures are:
– A brief description of the nature of the contingent liability
-An estimate of its financial effect
-An indication of the uncertainties that exist
-The possibility of any reimbursement
But according to IAS 37 say that disclosure is not required if payment is remote.
https://www.iasplus.com/en/standards/ias/ias37#:~:text=Contingent%20liability%3A,amount%20cannot%20be%20measured%20reliably
So I want to ask, there may errors in stating that “Contingent liabilities should not be recognised in financial statements but they should be disclosed in
the notes?”Moreover, I want to ask remote is “very little chance” or” have a chance but no probable”?
The definition of remote for this is when the probability of it happening is less than 5%.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to pass the exam well.
Be careful using a book from 2017 because although contingent liabilities remain in the syllabus, there are other topics for which the syllabus has changed. Our free notes and free lectures are all up to date for the current syllabus 🙂
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