IAS 37 Provisions | GLOBAL ACCOUNTANT

IAS 37 Provisions | GLOBAL ACCOUNTANT: "Provisions, contingent liabilities and contingent assets can often cause confusion among accountants, particularly in de- ciphering when to recognise a provision or disclosing a contingency. This article looks at the provisions laid down in FRS 12 and IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and FRS 21 / IAS 10 ‘Events After the Reporting Date’ and discusses when and when not to recognise a provision.
Definitions
A provision is a liability that is of uncertain timing or amount, to be settled by the transfer of economic benefits.

A contingent liability is:

(a) A possible obligation arising from past events whose existence will be confirmed only by the occurrence of one or more uncertain future events not wholly within the entity’s control, or."

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