Consider the following statements:a. Only Statement I is true. b. Only Statement II is true. c. Both Statements I and II are true. d. Neither Statement I nor II is true. I. A provision is a present obligation which may either be legal or constructive.II. Even if a provision is a result of past event, future events may be used to estimate it.

As per IAS 37 Provisions, Contingent Liabilities and Contingent Assets, A provision is a present…

Answered: I. A provision is a present obligation…

I. A provision is a present obligation which may either be legal or constructive. II. Even if a provision is a result of past event, future events may be used to estimate it.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter11: Invest Or Losses

Section: Chapter Questions

Problem 25DQ

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Question

Consider the following statements:

a. Only Statement I is true.

b. Only Statement II is true.

c. Both Statements I and II are true.

d. Neither Statement I nor II is true.

I. A provision is a present obligation which may either be legal or constructive.
II. Even if a provision is a result of past event, future events may be used to estimate it.

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A provision should be recognized when: O a. Present obligation from a past event, outflow that will be required to settle, and Reliable estimate can be made. O b. There is contingency. O C. Estimate is made and there is evidence readily available. O d. After the event has been follow through and there is a liability present.
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Which condition is necessary for the recognition of a liability? A. It is probable that an outflow of economic benefits will be required to settle an obligation B. The amount of the obligation can be measured reliably C. The amount of the obligation must be definite D. It is probable that an outflow of economic benefits will be required to settle an obligation and the amount of obligation can be measured reliably.
An obligation that is contingent on the occurrence of a future event should be reported in the statement of financial position as a liability if: a. The amount of the obligation can be reasonably estimated. b. The future event is likely to occur. c. The occurrence of the future event is at least reasonably possible and the amount is known d. The occurrence of the future event is probable and the amount can be reasonably estimated.
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