IAS 37 Provisions, Contingent Liabilities, and Contingent Assets

Content

IFRS

VAS

IAS 37 vs VAS 18 – Provisions, Contingent Liabilities, and Contingent Assets

Scope

This Standard shall not be applied for provisions, contingent liabilities and contingent assets resulting from executory contracts (the contract which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent), except where the contract is onerous.

Not mentioned.

Recognition

and measurement

rules

When it is uncertain whether events have resulted in a present obligation, an entity determines whether a present obligation exists at the end of the reporting period by taking account of all available evidence, including opinion of experts. The evidence considered includes any additional evidence provided by events after the reporting period. On the basis of such evidence:

(a) Where it is more likely than not that a present obligation exists at the end of the reporting period, the entity recognises a provision (if the recognition criteria are met); and

(b) where it is more likely that no present obligation exists at the end of the reporting period, the entity discloses a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.

When it is uncertain whether events have resulted in a present obligation, an entity determines whether a present obligation exists at the balance sheet date by taking account of all available evidence, including opinion of experts. The evidence considered includes any additional evidence provided by events after the balance sheet date. On the basis of such evidence:

a) Where it is certain that a present obligation exists at the balance sheet date, the enterprise recognises a provision (if the recognition criteria are met); and

b) When it is certain that no present obligation exists at the balance sheet date, the enterprise discloses a contingent liability, unless the possibility of an outflow of resources embodying economic benefits is remote.

The decrease in the value of the property

IAS 37 requires the entity to review the impairment of assets that are expected to suffer from future operating losses or high-risk contracts. IAS 36 “Impairment of Assets” is the standard that is applied to the cases above.

VAS 18 requires entities to review the impairment of assets that are expected to suffer from future operating losses or high-risk contracts. However, there is no VAS Standard that is equivalent to IAS 36 “Impairment of Assets”.