The objective of IAS 37 provision, contingent liabilities, and contingent assets, is to ensure that appropriate recognition criteria and measurement bases are applied to provision, contingent liabilities, and contingent assets and that sufficient information is disclosed in the notes to enable users to understand their nature, timing and amount.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. In other words contingent asset is an asset whose timing or amount can not be reliably established
Akakpo Ltd obtained a license free of charge from the government to dig and operate a gold mine. Akakpo Ltd spent TZS 6 million diggings and preparing the mine for operation and erecting buildings on site. The mine commenced operations on 1 September 2014. The license requires that at the end of the mine’s useful life of 20 years, the … Read the rest
Accounting policies are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.
Changes in accounting policies is dealt with in IAS 8
Difficulties faced by entity when applying a change in accounting policies are:
- When it is impracticable to determine either the period-specific effects or the cumulative effect of the
A provision is a liability of uncertain timing or amount.
A provision should be recognized when and only when:
- an entity has present obligation (legal or constructive) as result of past events
- it is probable (i.e more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligations; and
- a reliable estimate can