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Hello,
In this question there is a need for contingent liability to disclosed by one of the parties in the joint operation as a possible obligation that would arise on the other party’s inability to fund a provision in the future ( decomissioning costs ). Since I haven’t encountered many such questions yet, I wanted to know if this is how we would treat any third party liability that would arise in a joint operation? Do we always disclose a contingent liability in such cases?
Thank youJudgement call.
If it is PROBABLE that money would have to be paid – RECOGNISE a provision.
If it is POSSIBLE that money would have to be paid – DISCLOSE a contingent liability.
Everything would depend on the agreement reached between all parties involved.
Okay. If nothing is mentioned in the question, would it suffice if I state both of these possibilities and explain the treatment ?
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