tailieunhanh - Lecture Framework of financial reporting - Lecture 19

The main contents of the chapter consist of the following: Contingent liabilities and contingent assets, contingent assets, accounting for contingent liabilities, accounting for contingent liabilities and assets, events after the reporting period date IAS 10, adjusting events,. | Revise lecture 19 1 Contingent liabilities and contingent assets 2 Contingent liabilities A contingent liability is: 1. A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise OR 3 Contingent liabilities 2. A present obligation that arises from past events but is not recognised because: It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability. 4 Contingent assets A contingent assets is: A contingent assets is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. 5 Accounting for contingent liabilities Contingent liabilities: Should not be recognised in the statement of financial position itself. Should be disclosed in a note unless the possibility of a transfer of economic benefits is remote. 6 Accounting for contingent assets Contingent assets: Should not generally be recognised, but if the possibility of inflows of economic benefits is probable, they should be disclosed. If a gain is virtually certain, it falls within the definition of an asset and should be recognised as such, not as a contingent assets. 7 Accounting for contingent liabilities and assets The requirements of IAS 37 as regards contingent liabilities and assets are summarised in the following table: 8 Table 9 Accounting for contingent liabilities and assets Note that the standard gives no guidance as the meaning of the terms in the left-hand column (probable, possible, remote). One possible interpretation is as follows: Virtually certain > 95% Probable 51% - 95% Possible 5% - 50% Remote < 5% 10 Events after the reporting period date IAS 10 11 . | Revise lecture 19 1 Contingent liabilities and contingent assets 2 Contingent liabilities A contingent liability is: 1. A possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise OR 3 Contingent liabilities 2. A present obligation that arises from past events but is not recognised because: It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability. 4 Contingent assets A contingent assets is: A contingent assets is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise. 5 Accounting for contingent liabilities Contingent liabilities: Should