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CA Final · Financial Reporting · Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets

Ind AS 37 uses the word 'contingent' in a restricted sense, although in a general sense all provisions are uncertain in timing or amount. Which description matches the use of 'contingent' in the Standard?

Within Ind AS 37, 'contingent' refers to liabilities and assets that are not recognised because their existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the entity's control. Uncertainty of timing or amount alone does not make an item contingent.

  1. ALiabilities and assets not recognised because their existence will be confirmed only by uncertain future events not wholly within the entity's controlCorrect
  2. BAll liabilities whose settlement date or amount is uncertain
  3. CLiabilities that are recognised but disclosed separately because their amount is estimated
  4. DObligations that arise only from a legally enforceable contract

Explanation

The Standard says that in a general sense all provisions are contingent, but within the Standard 'contingent' is used for liabilities and assets not recognised because their existence depends on uncertain future events not wholly within the entity's control. Option B describes provisions, which are recognised, so it is wrong.

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