IAS 37 - "Past event" which gives rise to a present obligation

Lliamcolm12y ago

Hi Mike, A query i hope you can help me with Per IAS 37, a provision is recognised , when along with other criteria, a past event has occured which gives rise to a present obligation This "past event"....it is always an action or inaction by the reporting client, like signing a contract or supplying faulty goods?? What about the classic case of the law requiring the fitting of smoke filters as quoted in IAS 37, where if when the dates passes by which the filters have to be fitted, the client can still not create a provision for fitting the filters...does this mean that the passing of a law is a not a "past event" giving rise to a present obligation?? Thanks Liam

MikeLittleTutor12y ago#1

The smoke filter example is not the subject of a provision because presumably the client could close down their operations and thus avoid the expense of fitting smoke alarms. The lecture example of new law being passed requiring mining companies to clear up their operating sites creates an obligation because, even though the miners could abandon their mining operations, the site would still have to be cleared up Ok?

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