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Hello Mike!
IAS 37 says that a company should have a present obligation and to settle that obligation, it should be probable of an outflow of economic benefits.
-My confusion is that if a company has an obligation to transfer economic benefits, then why we should know whether it is probable or not?
If it has an obligation to pay, then it should pay.The issue here is whether or not there is a probable obligation (or even an obligation where it is probable that settlement of that obligation will involve the outflow of economic resource)
There is a degree of uncertainty about whether that obligation exists and/or whether there will be an outflow
And that uncertainty may be classified as possible or probable – that’s the issue!
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