IAS 37 and IAS 10

Contingent Assets and Contingent Liabilities

IAS -37(International Accounting Standards)

Provisions contingent assets and contingent liabilities

Contingent depending upon the outcome of future cost.eg: legal case

Classification:

•       Remote chance - less than 10%.
•       Possible chance - (-) 50% or less than 50%.
•       Probable chance - more than >50%
•       Virtually certain – more than 90%
•       Presentation in the balance sheet (inside).
•       Disclosure by notes (outside the b/s).

                                                      Liabilities                              Assets

1.     Remote chance       ->       do nothing                ->     do nothing

2.     Possible                  ->   disclosure by notes      ->     do nothing

3.     Probable                 ->   presentation in b/s       ->     disclosure

4.     Virtually certain     ->   presentation in b/s       ->     presentation

IAS-10 Events after reporting period

Accounting period – 1^st January – 31^st December (or) 1^st April – 31^st March

Reporting period- date on which accounting and financial statements are authorized for issue.

Events:

 There are two types of events:

1.     Adjusting events(presented in financial statements)

2.     Non adjusting events(disclosure by way of making notes)

 

a.     Adjusting events: The events that provide further evidence of conditions that existed at reporting date should be adjusted in financial statements.

b.     Non adjusting events: Events which do not affect the situation at the reporting date should not be adjusted but only disclosed in financial statements.

c. Dividends proposed or disclosed, after the end of reporting period but before financial statements are authorized is an non adjusting event.s