FEATURED

A Snap Shot into Accounting-IAS 37.

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;

  • There must be a present obligation as a result of past event and;
  • It is probable that an outflow of economic benefits will be required to settle the obligation.
  • A reliable estimate can be made.

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

Shamirah Naava

Recent Posts

President Museveni Launches Teso Industrial Hub, Warns Against School Fees in Public Schools

President Yoweri Museveni has inaugurated the Teso Zonal Presidential Industrial Hub in Arapai, Soroti City,…

16 hours ago

KCCA Halts Ham Enterprises Projects Over Flooding Concerns in Kampala

The Acting Executive Director of Kampala Capital City Authority (KCCA), Frank Rusa, has suspended construction…

23 hours ago

Museveni Appoints Prof. Moses Muhwezi as Makerere University Business School Principal

President Yoweri Museveni has appointed Prof. Moses Muhwezi as the principal of Makerere University Business…

2 weeks ago

Uganda Launches TVET Reforms to Boost Employment

The Ugandan government has introduced reforms in the Technical and Vocational Education and Training (TVET)…

4 weeks ago

Mbarara University Holds 31st Graduation, Welcomes New Vice Chancellor

Mbarara University of Science and Technology (MUST) held its 31st graduation ceremony on 19th October…

1 month ago

Love Languages Unpacked: How to Communicate Love in Ways That Truly Resonate

Discover the five love languages and learn how to communicate love effectively in your relationships.…

1 month ago

This website uses cookies.