(Summary) Ind AS 37
Provisions, Contingent Liabilities and
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 the financial statements to enable users to understand their nature, timing and amount.
Excludes obligations and contingencies arising from:
Financial instruments, non-onerous executory contracts, items covered by another IFRS.
- Recognition of a provision
- Obligating event
- Contingent liability
- Contingent asset
- Constructive obligation
- Possible obligation
Provision: Liability of uncertain Timing or Amount
Contingent asset: 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 entity.
A provision shall be recognised when:
Entity has a present obligation as a result of a past event; Probability that an outflow of resources embodying economic benefits will be required to settle the obligation; & Reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision shall be recognised.
Do not recognise contingent liabilities – but should disclose them, unless the possibility of an outflow of economic resources is remote.
Contingent assets should not be recognised – but should be disclosed where an inflow of economic benefits is probable. When the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
The amount recognised as a provision should be the best estimate of the expenditure required to settle the present obligation at the end of reporting period.
Review and adjust provisions at each balance sheet date. If an outflow no longer probable, provision is reversed.
Provision shall be used only for expenditures for which the provision was originally recognised.
It is- sale or termination of a line of business, closure of business locations, changes in management structure, fundamental reorganisations.
For each class of provision- opening & closing balance, additions, used amounts (i.e. incurred and charged against the provision), unused amounts reversed, or changes in discount rate,
Comparative information is not required.
For each class of provision, a brief description of: nature, timing, uncertainties, assumptions, reimbursement, if any.