Mr Little, kindly ask you to look at the following.
Which of these two are asset/liability?
1) Lawyers say that the company will probably receive some compensation.
2) There will be some warranty claims.
Is the first one an asset and the second one a liability?
Thanks in advance!
Ask the Tutor ACCA FR
Asset/liability recognition
10y ago#1The first is a contingent asset - to be recognised by numbers within the statement of financial position it needs to be more probable than 95% certain so it will be mentioned by way of disclosure note within the notes to the financial statements
The second is a virtually certain liability and, as such, should be recognised as an actual liability at a value that represents the probable outflow of resource under the warranty claims
Thank you sir. So, the first option is not recognized as an asset in FS, but the second option will be recognized as a liability then, right?
10y ago#3That's correct
Mr Little, can we recognize a patent or another intangible asset acquired through business combination? Thanks in advance
10y ago#5Yes. But not only CAN you. You MUST do
Sign into reply to this topic.