ACCA FR · Chapter 8 · Question 6 of 10
Snipe Co is suing a supplier for damages. At the year end its lawyers advise that the claim is probably, but not virtually certainly, going to succeed. How should Snipe Co treat the expected inflow?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Disclose it as a contingent asset, with no asset recognised
Explanation
Under IAS 37, contingent assets are never recognised. Where an inflow is probable, the contingent asset is disclosed. Only when the inflow becomes virtually certain is it no longer contingent, and an asset is then recognised.
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