Provisions and Contingencies – IAS 37
CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
17 August 2009CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
17 August 2009
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Provision against assets
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Recognition of Provisions
Provisions should be recognized if, and only if, all of these conditions are met:
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
No Reliable Estimate
Probable is often taken to mean the chance of occurrences is likely. ‘More likely than not’ would seem to suggest more than 50%.
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Changes in Provisions
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Contingent Liabilities
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Contingent Assets
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Reimbursements
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement should be recognised only when it is virtually certain that reimbursement will be received if the entity settles the obligation. Reimbursements of this nature are required to be treated as separate assets and the standard also comments that the amount recognised for reimbursement should not exceed the amount of the related provision.
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Measurement of Provision
The amount to be recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the balance sheet date. While a reliable estimate is usually possible, in rare circumstances, it may not be possible to obtain a reliable estimate. In such cases, the liability is to be disclosed as a contingent liability
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Estimation techniques
There are number of different techniques that can be used to arrive at the best estimate of the amount of a provision, where the creditor does not wish to settle and where there is no market in obligation of the kind for which provision is being made. Assuming that is possible to specify all the possible outcome and their associated probabilities, the amount to be provided for an obligation could be estimated as :
CA. Amit Daga
(Finance Controller CA. CS. CFA. CIFRS. M.COM. )
(9017 Points)
Replied 17 August 2009
Discounting
The standard suggest that where the effect of the time value of money is material the amount of a provision should be the present value of the expenditures expected to be required to settle the obligation.
LIVE Course on Foreign Exchange Management Act (FEMA)(with recording)
LIVE Course on Foreign Exchange Management Act (FEMA)(without recording)