if there is a probable outflow of resources provision and disclosure is required. So this is also an adjusting event correct?
but if its an adjusting event, are both provision and disclosure required?
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contingent liability and adjusting event
10y ago#1Adjusting events and contingent liabilities are, in general, quite separate.
For example, a law suit was received 15/12/2015 and everyone's opinion is that there is a probably outflow of funds. It needs to be disclosed. No more news is obtained by the time the FS are signed off on 31/1/2016. There is no element of post period event either adjusting or non-adjusting.
If however, on 15/1/2016 it was discovered that there would be a probably outflow of funds, the FS should be changed to show a provision. The new information is an adjusting event as it gived more information about the state of affaris at the date of the SOFP.
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