IAS 37 Pro­vi­sions, Con­tin­gent Li­a­bil­i­ties and Con­tin­gent As­sets out­lines the ac­count­ing for pro­vi­sions (li­a­bil­i­ties of un­cer­tain tim­ing or amount), to­gether with con­tin­gent as­sets (pos­si­ble as­sets) and con­tin­gent li­a­bil­i­ties (pos­si­ble oblig­a­tions and pre­sent oblig­a­tions that … Provisions. Contingencies and Events Occurring After the Balance Sheet Date(issued in 1978 and reformatted in … Provision: a liability of uncertain timing or amount. HKAS 37 … [IAS 37.80], When a provision (liability) is recognised, the debit entry for a provision is not always an expense. [IAS 37.61], Since there is common ground as regards liabilities that are uncertain, IAS 37 also deals with contingencies. Please complete the CAPTCHA field to verify you are human. Sometimes the provision may form part of the cost of the asset. The “provision for depreciation” and the Hong Kong Accounting Standard 37 Provisions, Contingent Liabilities and Contingent Assets (HKAS 37) is set out in paragraphs 1-10196. The amount recognised should not exceed the amount of the provision. Liability (per IAS 37 – provisions); and As part of Property, Plant and Equipment (IAS 16) Reduction in liability due to passage of time (i.e. Head office: Columbus Building, 7 Westferry Circus, Canary Wharf, London E14 4HD, UK. These words serve as exceptions. IAS 37 Provisions, Contingent Liabilities and Contingent Assets 2017 - 073 A contingent liability, being a possible obligation, is not recognised but is disclosed unless the possibility of an outflow of economic benefits is remote. The objective of IAS 37 is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount. International Accounting Standard 37: Provisions, Contingent Liabilities and Contingent Assets, or IAS 37, is an international financial reporting standard adopted by the International Accounting Standards Board (IASB). IAS 37 standard sets out the recognition, measurement and disclosure requirements of provisions, and it also deals with contingent assets and contingent liabilities. They should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. IAS 37 Provisions, Contingent Liabilities and Contingent Assetswas issued by the International Accounting Standards Committee in September 1998. Provisions are measured at the best estimate (including risks and uncertainties) of the expenditure required to settle the present obligation, and reflects the present value of expenditures required to settle the obligation where the time value of money is material. When the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate. If an outflow no longer probable, provision is reversed. It requires that entities should not recognise contingent liabilities – but should disclose them, unless the possibility of an outflow of economic resources is remote. As the probability of loss is 70%, this is the most likely outcome and the company would have to pay CU 100 000. Norme comptable internationale 37 Provisions, passifs éventuels et actifs éventuels Objectif L’objectif de la présente norme est de faire en sorte que les critères … The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. IAS 37 prescribes the accounting and disclosure for all provisions, contingent liabilities and contingent assets, except: (a) those resulting from financial instruments that are carried at fair value; Please remove any invalid characters ('', '+', '|'), links or URLs (e.g www.ifrs.org, http://www.ifrs.org) from the 'Your query' field and re-submit. [IAS 37.36] This means: In reaching its best estimate, the entity should take into account the risks and uncertainties that surround the underlying events. provisions IAS 37 does not specify whether the ‘best estimate’ of the expenditure required to settle a single obligation is the most likely outcome or the expected value of possible outcomes. What is a provision, when do you recognise them, where do people go wrong and what’s going on at the IASB? IAS 37 Provisions, Contingent Liabilities and Contingent Assets outlines the accounting for provisions (liabilities of uncertain timing or amount), together with contingent assets (possible assets) and contingent liabilities (possible obligations and present obligations that are not probable or not reliably measurable). [IAS 37.31-35], Reconciliation for each class of provision: [IAS 37.84], A prior year reconciliation is not required. This website uses cookies. A contingent asset should not be recognised but should be disclosed where an inflow of economic benefits is probable. IAS 37 allows the non-disclosure of information about provisions and contingent liabilities where disclosure is expected to prejudice the position of an entity in a dispute. 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