Provisions and Contingencies (Section 21 / IAS 37)

Overview

A provision is recognised when:

1. The entity has a present obligation (legal or constructive) as a result of a past event.
2. It is probable an outflow of resources embodying economic benefits will be required to settle the obligation.
3. The amount can be measured reliably.

Otherwise, a contingent liability is disclosed (unless the possibility of outflow is remote).

A contingent asset is disclosed when an inflow of economic benefits is probable but not virtually certain; if virtually certain, the asset is recognised.

Required first reads

• doctrine/accounting-finance-doctrine.md
• doctrine/references/ifrs-for-smes-default.md (Section 21)
• doctrine/references/full-ifrs-overlay.md (IAS 37)