ACCA FR · Chapter 8 · Question 5 of 10
Under IAS 37, how should a contingent liability be treated where an outflow of economic benefits is possible but not probable?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Disclose it in the notes to the financial statements
Explanation
A contingent liability is not recognised. It is disclosed unless the possibility of an outflow is remote, in which case nothing is reported. A provision is recognised only when the outflow is probable and the amount can be reliably estimated.
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