BCOM, BBA, CPA AND ACCA, accounting students and Any Other Accounting Practitioners.
Understanding IAS 37-Provisions, Contingent Assets and Contingent Liabilities.
Provision
A provision is a liability of uncertain timing and amount.
The objective of IAS 37 is to specify the accounting treatment for provisions- This accounting standard brings about consistence in the making of provisions in the financial statements.
We recognize a provision if a reliable estimate can be made.
IAS 37 stipulates the recognition criteria in the financial statements for Provisions which is;
When such conditions exist, the entries in the financial statements will be as follows;
Dr Expense when provision is created
Cr Provision (Liability).
Contigent Liabilities
These are not recognized in the Financial Statements hence no double entry is passed unless; there is information regarding the same then only disclosed in the notes to the financial statements.
Also read:https:https://www.campustimesug.com/?s=ifrs+5
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