Good day to you
Which of the following statements about the requirments of IAS37 Provisions.contingent liabilities and contingent asset are correct?
1 Contingent assets and liabilities should not be recognised in the financial statements.
2 A contingent asset should only be disclosed in the notes to a financial statement where an
inflow of economic benefits is probable.
3 A contingent liability may be ignored if the possibility of the transfer of economic benefits is
remote.
My answer was 2 and 3
I didn't pick option 1 because I thought contingent liabilitites are provided in the scenario of certiain and probablr
I thought that contingent assets are the only ones catergorized as certain
Since I thought contingent liabilities are not recognized I ignored the 1st option
but apparently this is wrong and the 1st option is correct
Please help me figure out why contingent liabilities are 'recognized' and not provided instead for this question??
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Contingent Asset and contingent liability
5y ago#1Contingent liabilities are certainly recognised if the liability is due to past events and the payment is probable.
Do see my notes and lectures on IAS 37.
Oh okay thank you very much for answering
I just checked the notes on IAS 37 and you indeed have stated to recognize it if it is a contingent liabiltiy
Now I have just another small thing just to clarify
Sometimes the textbook says the revision kit says the word provide instead of recognize (which was in your lecture notes also)
I suppose it essentially means the same thing doesn't it??
I'm not sure whether my thought was correct..just wanted to get it check from you
Please correct me if i was wrong about my thought
5y ago#3In this context the two do mean the same. (However 'recognise' on its own just means show in the financial statements, so for example we recognise non-current assets in the financial statements :-) )
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