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Hi John,
I was doing the BPP kit and often trip up on questions like these, where the correct answer is that “contingent assets and liabilities should not be recognised in the financial statements” (page 163, mixd bank 3, Q40.13).
however, I thought that contingent assets that are virtually certain (>95%) and contingent liabilities that are probable (>50%) should be recognised in the FS?
Thanks
I have not got the Revision Kit to be able to check the wording of the question. However if the contingent asset or liability results from past events then they should be recognised but only if the probabilities are as you state. As a result not all contingent liabilities or assets will be recognised.
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