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march 2020 Ecoma Co. Q4b)i) again!
sir again the same question! Now i have a doubt related to the provision we have created pertaining to contingent consideration of $0.4m that has a 40% chance of accruing to the entity.
Now in F7 we had studied that if the chances of contingent asset are less than 50% then we ignore, if between 50-95% then disclose through note and over 95% we need to recognise an asset.
so here if the probability was less than 40%, should not we have ignored the asset(receipt of $0.4m) ???
Why find the expected value??
Normal rule – only recognise if probable, as you say.
There used to a minor exception re cancelled leases under OLD RULES. I suggest you ignore this.