IAS 37 Provisions, contingent liabilities and contingent assets prescribes the accounting and disclosure for those items named in its title.
Required
Define provisions and contingent liabilities and briefly explain how IAS 37 improves consistency in financial reporting.
Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.
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