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Financial Liability Versus Contingent Liability

KKyler9y ago
Hi Sir Chris! I was looking at June 2014 Q3 b. And “the amount of 50K paid at the end of each year for three years provided that the player has competed in all the specified tournaments.” -is considered a financial liability. I was just wondering how come it was not dealt with under provisions, contingent liabilities instead? Thanks!
P2-D2P2-D2Tutor9y ago#1
Hi Kyler, IAS 37 deals with uncertainty and in this instance there isn't really any uncertainty as there is a contract in place. Due to the contract we meet the definition of a financial liability (contractual obligation to pay cash) and so it is dealt with as a financial instrument. Thanks
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