Question

1. IAS 37 ensures 'consistency between entities in the recognition and measurement of provisions and contingencies and that sufficient information is disclosed about them to users so that they can understand their effect on current and future results' Discuss

Can someone explain in detail whether this is true?

Answer 1

Yes this is true.

IAS 37 guides the criteria for the appropriate recognition criteria and measures estimates of the provisions and the contingent liabilities to be recognised so that the appropriate and genuine estimates are made in the financial statements and true and fair view of the financial statements is available to the users of the financial statements.

When a liability or provision is made, this IAS guides the estimated provisioniis made based on probability of occurrence of the that liability.

If the probability of the liability to crystallise is rare,e.g losing of a court case and payment of the liability will arise on losing of a case is likely to be very less, only a footnote regarding the same is to be given to the users of the financial statements.

Hope this helped!

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