contingent liability

IAS 37 Provisions, Contingent Liabilities and Contingent Assets — CPDbox — Making IFRS Easy

contingent liability

Have you ever heard a joke about two accountants applying for a job?

During their interview, they were given a task to calculate a net profit figure available data.

After some while, interviewer asked them a question: “What result did you get? What is the net profit of this company?”

The first accountant replied: the net profit is 150 mil. USD.

And the second one asked: “What would you it to be?”

Now guess which one got the job!

Источник: https://www.cpdbox.com/ias-37-provisions-contingent-liabilities-contingent-assets/

Резервы, условные активы, условные обязательства (Provisions, Contingent asset, Contingent liability) – МСФО

contingent liability

Резерв – это обязательство, в отношении срока либо суммы погашения которого имеется неопределённость.

Условный актив – это возможный актив, который:

  • возникает из прошлых событий и
  • существование которого будет подтверждено только наступлением (или не наступлением) одного или более неопределенных будущих событий, которые не находятся под полным контролем компании.

Условное обязательство это:

  • возможная обязанность, которая возникает из прошлых событий и наличие которой будет подтверждено только наступлением или не наступлением одного или более неопределенных будущих событий, которые не полностью находятся под контролем компании; или
  • существующая обязанность, которая возникает из прошлых событий, но не удовлетворяет критериям признания обязательства.

Конструктивное (подразумеваемое) обязательство – это обязательство, возникающее когда компания своими практическими действиями в прошлом либо достаточно подробными заявлениями, сделанными публично, дало третьим сторонам основания ожидать выполнения компанией какого-либо действия в будущем.

Учет резервов, условных активов/условных обязательств по МСФО ведется в соответствии со стандартом МСФО (IAS) 37 «Резервы, условные обязательства и условные активы».

Признание

Резервы признаются только в случае выполнения следующих условий:

  • компания имеет правовое или конструктивное обязательство, возникшее в результате прошлых событий;
  • скорее вероятно, чем нет, что в связи с выполнением такого обязательства возникнет отток ресурсов, заключающих в себе экономические выгоды; и
  • величину обязательства можно надёжно оценить.

Компания не создает резервы в отношении:

  • затрат на ремонт и обслуживание собственных активов, поскольку они относятся к их будущему использованию. Такие затраты включаются в состав текущих расходов отчётного периода;
  • будущих операционных убытков, за исключением случаев, когда они относятся к обременительным контрактам.

Оценка резервов

Сумма резерва определяется как наилучшая оценка расходов, требуемых для погашения обязательства по состоянию на отчетную дату.

Если возможны несколько сценариев развития событий, то резерв оценивается в сумме ожидаемой стоимости. Ожидаемая стоимость – это статистическая величина, которая рассчитывается путём взвешивания всех возможных исходов по коэффициентам вероятности наступления каждого из этих исходов.

Против резерва могут списываться только те виды затрат, под которые создавался указанный резерв. Компания пересматривает величину резервов на каждую отчетную дату. Если отток ресурсов, заключающих в себе экономические выгоды, для выполнения обязательства перестал быть вероятным, резерв подлежит восстановлению в том периоде, когда произошло изменение соответствующих условий.

Виды резервов (примеры)

  •  резерв по природоохранным мероприятиям

Компания признает резерв по природоохранным мероприятиям, когда у нее имеется правовое или конструктивное обязательство по восстановлению окружающей среды, вред уже причинен, вероятность возникновения затрат по восстановлению является высокой, и величина этих затрат может быть обоснованно оценена.

  • обременительные контракты

Обременительный контракт – это контракт, неизбежные затраты на выполнение обязательств по которому превышают экономические выгоды, ожидаемые к получению от этого договора.

В качестве резерва по обременительным контрактам признаётся дисконтированная стоимость обязательства

Реструктуризация – это программа действий, запланированная и контролируемая руководством компании, направленная на существенное изменение:

— сферы деятельности; или

— способа ведения бизнеса.

Конструктивное (подразумеваемое) обязательство по реструктуризации возникает только тогда, когда:

— компания имеет формализованный план по реструктуризации;

— у сторон, затрагиваемых реструктуризацией, есть объективные основания ожидать, что компания реализует этот план на практике.

В состав резерва по реструктуризации не включаются такие затраты как:

— обучение или перемещение персонала;

— маркетинговые и административные затраты;

— инвестиции в новые системы и сети распространения.

  • резервы, связанные с юридическими обязательствами, создаются в случаях, когда компания:

— выступает ответчиком в суде по иску;

— имеет обязательства, связанные с требованиями законодательства.

Резерв оценивается как величина вероятных выплат по иску или сумма расходов на погашение возникших в силу законодательства обязательств.

Как правило резервы включаются в состав операционных расходов компании.

Условные активы и обязательства

Условные активы не признаются в Отчете о финансовом положении.

Условные обязательства не признается в Отчете о финансовом положении, кроме случаев, когда они возникают в результате сделки по объединению бизнеса, если их величина может быть с надёжностью определена.

В случае, когда реализация экономических выгод, связанных с условным активом, является практически несомненной (вероятность более 90 процентов), этот актив перестает считаться условным и должен быть признан в финансовой отчетности в обычном порядке.

Раскрытие информации в финансовой отчетности

Резервы представлены в Отчете о финансовом положении компании отдельной строкой.

Резервы, которые будут использованы в пределах одного года, классифицируются как краткосрочные обязательства.

Для каждого вида резервов компания раскрывает в примечаниях к финансовой отчётности следующую информацию:

  • балансовую стоимость на начало и конец периода;
  • дополнительные резервы, созданные за период, включая увеличение существующих резервов;
  • использованные суммы (понесенные или начисленные против резервов) в течение периода;
  • неиспользованные суммы, аннулированные в течение периода;
  • увеличение в течение периода в дисконтированных суммах, возникающее в результате течения времени, и влияние любых изменений в ставках дисконтирования;
  • краткое описание характера обязательства и ожидаемое время выбытия экономических выгод, возникающих вследствие этого обязательства;
  • факторы, относящиеся к неопределенности суммы или времени такого выбытия. Там, где необходимо предоставить адекватную информацию, компания должна раскрывать основные допущения, сделанные в отношении будущих событий;
  • сумму любых ожидаемых вероятных возмещений с указанием суммы любого актива, который был признан для этого ожидаемого возмещения.

Информация об условных обязательствах подлежит раскрытию, за исключением случаев, когда вероятность выбытия ресурсов, содержащих экономические выгоды, является очень низкой.

Информация, которая должна быть раскрыта в отношении условного обязательства, связанного с каким-либо юридическим иском, должна включать следующие данные:

  • пояснение сути иска;
  • указание на факт того, что обязательство не признавалось;
  • объяснение оснований, по которым предприятие не принимает на себя обязательство по иску;
  • информация о сумме иска или объяснение причин, в силу которых обоснованная оценка данной величины невозможна; и
  • информация о любых видах компенсации, право на получение которой возникает в том случае, если предприятие проигрывает дело по иску.

Информация об условных активах подлежит раскрытию, когда поступление экономических выгод, связанных с ними, является скорее вероятным, чем нет. Раскрываемая информация включает описание характера условного актива и, по возможности, расчетную оценку его величины в денежном выражении.

Источник: https://www.audit-it.ru/ifrs/terms/items/provisions-contingent-asset-liability.html

Contingent Liabilities (Definition,Types) | When & How to Record?

contingent liability

Contingent Liabilities refers to the potential liability of the company which may arise on some future date on basis of a contingent event that is beyond control of company and this will be recorded by the company in its balance sheet only in case if it becomes certain that contingency is ly in company and amount of such liability can be estimated reasonably.

In simple words, it is defined as the obligations or liabilities in the future, which may or may not arise due to uncertain events or situations. These liabilities are also recorded in the accounting books if the amount of the liability can be estimated.

These liabilities will be if a person X obtains a loan from the Bank and Y is signed as a guarantee for that loan and the bank will release the funds that guarantee if the person X fails to repay the loan than the guarantee Y has to pay it, this, in turn, is referred to as contingent liability. They are generally not recognized as financial assets or liabilities on the balance sheet before the conditions are met.

#1 – Potential Lawsuits

Potential lawsuits arise when an individual gives the guarantee on the other person’s behalf when the actual person or individual fails to pay that the person who provided the guarantee must pay the money.

#2 – Product Warranty

When a product is manufactured and ready to sell than some companies give product warranty, i.e., a minimum guarantee for a certain period and when the product fails to perform within the warranty period than the product has to be replaced or repaired by the company which is a liability to the company.

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Let us see the example where a person has purchased a motorcycle from a showroom and has a warranty for the engine and the motorcycle for two years, and the engine failed to work within six months of the purchase, then the company has to replace the engine. Hence, this is a contingent liability to the company.

#3 – Pending Investigations

Any pending investigation or a court case by law if found that the individual or the company is defaulter than they were supposed to bear the penalty as prescribed the court of law.

#1 – Explicit Contingent Liabilities

These are some of the specific kinds of obligations of the government or legal obligations that are established by law or which is authorized by law.

Some of the examples are:

  • Central government guarantee for non-sovereign borrowing.
  • Insurance schemes: i.e., Government insurance schemes on bank bonds, bank deposits, and some of the pension funds.
  • Central bank obligations or liabilities.
  • A mortgage loan, student loans, agriculture loans, etc.
  • Civil service pensions.
  • Central government guarantees on private investments.
  • Indemnities that are accepted for the loss or damage of another party;
  • Legal claims in which the court orders to pay the sum of money or penalty towards the pending cases.
  • Currency exchange rates.

Type #2 – Implicit Contingent Liabilities

These are the legal obligations that are recognized generally after the occurrence of the event or after the realization of it, in such cases Governments to make the amount for such types of causes. These are not officially recorded as they may occur or may not occur.

Some of the examples are :

  • Environmental recovery, disaster relief, Floods, Cyclones, Tsunami, and any natural disasters. In such cases, the government will take the necessary steps for making payments or help to the affected areas and affected people and property.
  • Social security benefits.
  • Bank failures to repay the money.
  • Municipality defaulters.
  • Failure of a non guaranteed pension fund;
  • The default of the central bank on its obligations (trading of currency, the balance of payment stability);
  • Trade credit and advances.

When to Record Contingent Liabilities?

  • Probable – Record this type of liability when there is a probability that the event or loss may occur and when we can reasonably estimate the amount of the loss that happened to a specific range.
  • Reasonably Possible – Reveal the existence of this liability when in the financial statements if the obligation or the liability is reasonably possible but not probable.
  • Remote – There is no need to record or reveal this contingent liability if the chances of its occurrence are remote.

What is the Need for Calculating Contingent Liabilities?

Contingent liabilities that may occur in the future are much needed to be calculated because there is an economic and financial impact involved in these liabilities. It will be challenging to accurately assess the financial position of the economy or the entity if these liabilities are not captured or measured.

It will be good if we record an entity’s or government’s contingent liabilities. Designing the budget to keep an eye on such liabilities will be good for the economy of the country.

It will also be good for the entities as it will not spoil the company’s reputation, as mentioned in the financial statements earlier. It’s good to have a record, even though these aren’t full and accurately.

By taking into account past effects, only some countries Australia, New Zealand, and Canada mention it.

Conclusion

There are both the advantages and disadvantages of contingent liabilities, as it can be a benefit to the beneficiary and a loss to the person concerned or who is supposed to make the payment to the beneficiary. It will be good for anyone who may record and mention it on their financial statements. Estimation plays a vital role here.

In the case of implicit contingent liabilities, it will be difficult to estimate when natural disasters occur. In such cases, the liabilities are only measured after the occurrence, and the government will pay money or repair the areas affected.

In general, such liabilities may or may not occur, but it is better to keep track of or record what is ly to occur.

This article has been a guide to Contingent Liabilities and its definition. Here we discuss its meaning, types, and categories of contingent liabilities along with detailed explanations. You can learn more about accounting from following articles –

Источник: https://www.wallstreetmojo.com/contingent-liabilities/

Contingent Liability — How to Use and Record Contingent Liabilities

contingent liability

A contingent liability is a potential liability that may or may not occur, depending on the result of an uncertain future event. The relevance of a contingent liability depends on the probability of the contingency becoming an actual liability, its timing, and the accuracy with which the amount associated with it can be estimated.

A contingent liability is recorded in the accounting recordsThree Financial StatementsThe three financial statements are the income statement, the balance sheet, and the statement of cash flows.

These three core statements are intricately if the contingency is probable and the related amount can be estimated with a reasonable level of accuracy. The most common example of a contingent liability is a product warranty.

Other examples include guarantees on debtsCost of DebtThe cost of debt is the return that a company provides to its debtholders and creditors. Cost of debt is used in WACC calculations for valuation analysis.

, liquidated damages, outstanding lawsuitsTop Accounting ScandalsThe last two decades saw some of the worst accounting scandals in history. Billions of dollars were lost as a result of these financial disasters. In this, and government probes.

Why is a Contingent Liability Recorded?

Both GAAP (Generally Accepted Accounting Principles) and IFRSIFRS StandardsIFRS standards are International Financial Reporting Standards (IFRS) that consist of a set of accounting rules that determine how transactions and other accounting events are required to be reported in financial statements. They are designed to maintain credibility and transparency in the financial world (International Financial Reporting Standards) require companies to record contingent liabilities, due to their connection with three important accounting principles.

1. Full Disclosure Principle

According to the full disclosure principle, all significant, relevant facts related to the financial performance and fundamentals of a company should be disclosed in the financial statements.

A contingent liability threatens to reduce the company’s assets and net profitability and, thus, comes with the potential to negatively impact the financial performanceAnalysis of Financial StatementsHow to perform Analysis of Financial Statements.

This guide will teach you to perform financial statement analysis of the income statement, and health of a company. Therefore, such circumstances or situations must be disclosed in a company’s financial statements, per the full disclosure principle.

2. Materiality Principle:

The materiality principle states that all important financial information and matters need to be disclosed in the financial statementsThree Financial StatementsThe three financial statements are the income statement, the balance sheet, and the statement of cash flows. These three core statements are intricately.

An item is considered material if the knowledge of it could change the economic decision of users of the company’s financial statements. In this context, the term “material” is basically synonymous with “significant”.

A contingent liability can negatively impact a company’s financial performance and health; clearly, the knowledge of it might influence the decision-making of different users of the company’s financial statements.

3. Prudence Principle

Prudence is a key accounting concept that makes sure that assets and income are not overstated, and liabilities and expenses are not understated.

Since the outcome of contingent liabilities cannot be known for certain, the probability of the occurrence of the contingent event is estimated and, if it is greater than 50%, then a liability and a corresponding expense is recorded.

The recording of contingent liabilities prevents understating of liabilities and expenses.

Using Knowledge of a Contingent Liability in Investing

Since a contingent liability can potentially reduce a company’s assets and negatively impact a company’s future net profitability and cash flow, knowledge of a contingent liability can influence the decision of an investor.

An investor buys stock shares in a company to gain a future share of its profits.

Since a contingent liability may reduce a firm’s ability to generate profits, the knowledge of it can dissuade an investor from investing in the company, depending on the nature of the contingency and the amount associated with it.

Similarly, the knowledge of a contingent liability can influence the decision of creditors considering lending capital to a company. The contingent liability may arise and negatively impact the ability of the company to repay its debt.

Impact of Contingent Liabilities on Share Price

Contingent liabilities are ly to have a negative impact on a company’s share price, as they threaten to negatively impact the company’s ability to generate future profits.

The magnitude of the impact on the share price depends on the lihood of a contingent liability actually arising and the amount associated with it.

Due to the uncertain nature of contingent liabilities, it is difficult to estimate and quantify the exact impact that they might have on a company’s share price.

The level of impact also depends on how financially sound the company is. If investors believe that the company is in such a solid financial situation that it can easily absorb any losses that may arise from the contingent liability, then they may choose to invest in the company even if it appears ly that the contingent liability becomes an actual liability.

A contingent liability, unless very large, will not affect a company’s share price in a major way if the company maintains a strong cash flow position and is rapidly growing earnings. The nature of the contingent liability and the associated risk play an important role.

A contingent liability that is expected to be settled in the near future is more ly to impact a company’s share price than one that is not expected to be settled for several years.

Often, the longer the span of time it takes for a contingent liability to be settled, the less ly that it will become an actual liability.

Recording

Per GAAP, contingent liabilities can be broken down into three categories the lihood of occurrence.

The first category is the “high probability” contingency, which means that the probability of the liability arising is greater than 50% and the amount associated with it can be estimated with reasonable accuracy.

Such events are recorded as an expense on the income statement and a liability on the balance sheet.

A “medium probability” contingency is one that satisfies either, but not both, of the parameters of a high probability contingency. These liabilities must be disclosed in the footnotes of the financial statements if either of the two criteria is true.

Contingent liabilities that do not fall into the categories mentioned above are considered “low probability.” The lihood of a cost arising due to these liabilities is extremely low and, therefore, accountants are not required to report them in the financial statements. However, sometimes companies put in a disclosure of such liabilities anyway.

Incorporating Contingent Liabilities in a Financial Model

Modeling contingent liabilities can be a tricky concept due to the level of subjectivity involved. The opinions of analysts are divided in relation to modeling contingent liabilities.

As a general guideline, the impact of contingent liabilities on cash flow should be incorporated in a financial model if the probability of the contingent liability turning into an actual liability is greater than 50%.

In some cases, an analyst might show two scenarios in a financial model, one which incorporates the cash flow impact of contingent liabilities and another which does not.

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Summary

The accounting of contingent liabilities is a very subjective topic and requires sound professional judgment. Contingent liabilities can be a tricky concept for a company’s management, as well as for investors. Judicious use of a wide variety of techniques for valuation of liabilities and risk weighting may be required in large companies with multiple lines of business.

Sophisticated analyses include techniques options pricing methodology, expected loss estimation, and risk simulations of the impacts of changed macroeconomic conditions.

Contingent liabilities should be analyzed with a serious and skeptical eye, since, depending on the specific situation, they can sometimes cost a company several millions of dollars. Sometimes contingent liabilities can arise suddenly and be completely unforeseen. The $4.

3 billion liability for Volkswagen related to its 2015 emissions scandal is one such contingent liability example.

Thank you for reading our explanation of contingent liabilities. To understand more about the concept of liabilities in business accounting, see the following CFI resources:

  • Current LiabilitiesCurrent LiabilitiesCurrent liabilities are financial obligations of a business entity that are due and payable within a year. A company shows these on the balance sheet. A liability occurs when a company has undergone a transaction that has generated an expectation for a future outflow of cash or other economic resources.
  • Current Portion of Long-Term DebtCurrent Portion of Long Term DebtThe current portion of long term debt is the portion of long-term debt due that is due within a year’s time. Long-term debt has a maturity of more than one year. The current portion of long-term debt differs from current debt, which is debt that is to be totally repaid within one year.
  • Accounting CycleAccounting CycleThe accounting cycle is the holistic process of recording and processing all financial transactions of a company, from when the transaction
  • Analysis of Financial StatementsAnalysis of Financial StatementsHow to perform Analysis of Financial Statements. This guide will teach you to perform financial statement analysis of the income statement,

Источник: https://corporatefinanceinstitute.com/resources/knowledge/accounting/what-is-contingent-liability/

IAS 37 – Provisions, contingent liabilities and contingent assets

contingent liability

For some ACCA candidates, specific IFRS® standards are more favoured than others.

IAS® 37 appears to be less popular than other standards because, usually, answers to Financial Reporting (FR) questions required a balanced discussion of whether criteria are met, as opposed to calculating numbers.

However, IAS 37 is often a key standard in FR exams, and candidates must be prepared to wrestle with applying the criteria.

This article will consider the aims of the standard, followed by the key specific criteria which must be met for a provision to be recognised. Finally, it will examine some specific issues which are often assessed in relation to the standard.

The definition of a provision is key to the standard. A provision is a liability of uncertain timing or amount, meaning that there is some question over either how much will be paid or when this will be paid. In the past, these uncertainties may have been exploited by companies trying to ‘smooth profits’ in order to achieve the results they believe that their various stakeholder may want.

For example, let’s take a fictional company, Rey Co. At the start of the year, Rey Co sets a profit target of $10m for the year ended 31 December 20X8.

The chief accountant of Rey Co has reviewed the profit to date and realises they are ly to achieve profits of $13m.

The accountant knows that if Rey Co  reports a profit of $13m, directors will not get any more of a bonus than if they reported $10m. He also knows that the profit target will be set at $14m in the next year.

To avoid this, the accountant may be tempted to make some provisions for some potential future expenses of $3m, with the impact of making the profit seem lower in the current period.

As the double entry for a provision is to debit an expense and credit the liability, this would potentially reduce the profit down to $10m. Then in the next year, the chief accountant could reverse this provision, by debiting the liability and crediting the profit or loss.

This is effectively an attempt to move $3m profit from the current year into the next period.

Clearly this is not good for the users of the financial statements, as they would have been manipulated and given a false impression of the performance of the business. This is where IAS 37 is used to ensure that companies report only those provisions that meet certain criteria.

IAS 37 stipulates the criteria for provisions, contingent liabilities and contingent assets which must be met in order for a provision to be recognised, so that companies should be prevented from manipulating profits. According to IAS 37, 3 criteria are required to be met before a provision can be recognised. These are:

  1. There needs to be a present obligation from past event
  2. There needs to be a reliable estimate
  3. There needs to be a probable outflow

These criteria will now be examined in further detail to see how they can be applied in practice.

1. Present obligation from a past event

This rule has two parts, first the type of obligation, and second, the requirement for it to come from a past event (something must have already have  happened to create the obligation).

(a) Type of obligation

The obligation could be a legal or contractual one, arising from a court case or some kind of contractual arrangement. Most candidates are able to spot this in exams, identifying the presence of a potential obligation of this type.

The second type of obligation is one called a constructive obligation. This is where a company establishes an expectation through an established course of past practice.

Example

Rey Co has a published environmental policy. In this, Rey Co explains that they always replant trees to counter-balance the environmental damage created by their operations. Rey Co has a consistent history of honouring this policy. During 20X8, Rey Co opened a new factory, leading to some environmental damage. Rey Co estimate that the damage will cost $400,000 to restore.

Even if the country has no legal regulations forcing Rey Co to replant trees, Rey Co will have a constructive obligation because it has created an expectation from its publications, practice and history.

(b) Past event

The obligation needs to have arisen from a past event, rather than simply something which may or may not arise in the future.

Example

Rey Co would have to provide for a potential legal case arising from an employee who was injured at work in 20X8 due to faulty equipment. This is because the event arose in 20X8 which could lead to an obligation.

Rey Co could not provide for any possible claims which may arise from injuries in the future. That is because there is no past event which has created the obligation.

Similarly, if Rey Co has to pay to install new safety equipment in the factory in 20X9, there is no present obligation to do this in 20X8, so no provision is required.

Rey Co could delay the work until 20X9, or sell the building.

2. Reliable estimate

In an exam, it is unly that there will not be a reliable estimate. wise it is unly that an entity will be able to avoid recording a liability when there is an obligation by claiming there is no way of producing an estimate of the amount.

The main rule to follow is that if the item is a one-off item, the best estimate will be the most ly outcome.

If the item is made up of a number of items, such as a warranty provision for repairing goods, the expected value should be calculated using the probability of all events happening.

Example – best estimate

Rey Co has received legal advice that the most ly outcome of the court case from the employee is that they will lose the case and have to pay $10m. The legal team think there is an 80% chance of this. They believe there is a 10% chance of having to pay $12m, and a 10% chance of paying nothing.

In this case, Rey Co would provide $10m, being the most ly outcome. It will not be uncommon to take the $12m, thinking that the worst-case scenario should be provided for. Other candidates may calculate an expected value the various probabilities.

Example – expected value

Rey Co gives a year’s warranty with all goods sold during the year. Past experience shows that Rey Co needs to do no repairs on 85% of the goods. On average, 10% need minor repairs, and 5% need major repairs. Rey Co’s manufacturing manager has calculated that if minor repairs were needed on all goods it would cost $100,000, and major repairs on all goods would cost $1m.

Here, the provision would be measured at $60k. The expected cost of minor repairs would be $10k (10% of $100k) and the expected costs of major repairs is $50k (5% of $1m). This is because there will not be a one-off payment, so Rey Co should calculate the estimate of all of the ly repairs.

3. Probable outflow

The final criteria required is that there needs to be a probable outflow of economic resources. There is no specific list of what % lihood is required for an outflow to be probable. A probable outflow simply means that it is more ly than not that the entity will have to pay money out.

If it appears that there is a possible outflow then no provision is recorded. In this situation, a contingent liability would be reported. A contingent liability is simply a disclosure note shown in the notes to the accounts.

There is no double entry recorded in respect of this. Instead, a description of the event should be given to the users with an estimate of the potential financial effect.

In addition to this, the expected timing of when the event should be resolved should also be included.

Similar to the concept of a contingent liability is the concept of a contingent asset. This relates to a potential inflow of economic resources which could come into the entity. a contingent liability, a contingent asset is simply disclosed rather than a double entry being recorded.

Again, a description of the event should be recorded in addition to any potential amount related to this. The key difference is that a contingent asset is only recorded if there is a probable future inflow, rather than a possible one.

The table below shows the treatment for an entity depending on the lihood of an item happening.

Источник: https://www.accaglobal.com/pk/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/ias-37.html

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