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Hi . I have a little confusion concerning the answer of this question.
How does a company account for a contingent asset that is not ?
A By way of note
B As an asset in the statement of financial position
C It does nothing
D Offset against any associated liability
why contingent asset is probable As an asset in the statement of financial position,A contingent asset must not be recognised as an asset in the financial statements. Instead it should be disclosed in the notes to the accounts if it is probable that the economic benefits associated with the asset will flow to the entity.The question does not actually make sense as you have typed it:
“How does a company account for a contingent asset that is not ? ”
Not what?
A contingent asset is only recognised if it is virtually certain.
If it is probable, then it is disclosed by note.
Otherwise nothing.All of this is covered in our free lectures on contingent assets and contingent liabilities.
Our free lectures cover everything needed to be able to pass Paper F3 well.
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