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IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IAS 37 Provisions, Contingent Liabilities and Contingent Assets sets the recognition criteria and measurement bases to be applied to provisions, contingent liabilities and contingent assets.

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Summary

IAS 37 requires that a provision is only recognised where:

  • there is a legal or constructive present obligation as a result of a past event, and
  • payment is probable, and
  • the amount can be reliably estimated.

The amount of the provision should be the best estimate of the amount required to settle the obligation at the reporting date.

Contingent liabilities are not recognised, but are disclosed unless the possibility of an outflow of economic resources is remote.

Contingent assets are not recognised, but are disclosed where an inflow of economic benefits is probable.

Recent amendments

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Related IFRIC interpretations

IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IFRIC 1 addresses accounting for a change in a provision that is included in the carrying amount of an item of property, plant or equipment.
IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
Provides guidance on how a contributor to a decommissioning fund should account for its interest in a fund.
IFRIC 6
IFRIC 6 clarifies when producers of electrical goods must recognise a liability under IAS 37 for the cost of managing waste electrical and electronic equipment.
IFRIC 12 Service Concession Arrangements
Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.
IFRIC 21 Levies
Provides guidance on when to recognise a liability for a levy imposed by a government.
SIC 29 Disclosure – Service Concession Arrangements SIC 29 prescribes the disclosure requirements for each of the parties to the agreement.

UK reduced disclosures – FRS 101

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page gives more information on which entities qualify and the criteria to be met.

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These resources are available exclusively to Corporate Reporting Faculty subscribers, ICAEW members and students.

eBooks

The ICAEW Library & Information Service provides full text access to a selection of key business and reference eBooks from leading publishers. eBooks are available to logged-in ICAEW members, ACA students and other entitled users. If you are unable to access an eBook, please see our Help and support advice or contact library@icaew.com.

Exclusive Current liabilities, provisions, contingencies and events after the reporting period
  • eBook chapter
  • 2022
  • PKF International Ltd
  • Wiley Interpretation and Application of IFRS Standards
Updated edition providing a detailed reference guide with practical examples, and IFRIC interpretations and directions. This chapter discusses IAS 10 and IAS 37.
Exclusive Provisions, contingent liabilities and contingent assets
  • eBook chapter
  • 2021
  • Ernst & Young LLP
  • International GAAP - Generally Accepted Accounting Practice under International Financial Reporting Standards
A global perspective on technical accounting issues with worked examples and illustrations from published financial reports of major listed companies from around the world. This chapter discusses IAS 37.
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Other resources

International GAAP 2023: The global perspective on IFRS
  • Website
  • EY

Detailed guide on interpreting and implementing IFRS, with illustrative examples and extracts from financial statements. The manual is available online (free registration required) as part of EY Atlas Client Edition.

Thematic Review: IAS 37 Provisions, Contingent Liabilities and Contingent Assets
  • Website
  • FRC

FRC report summarising the key findings from its review of IAS 37 disclosures. The review covered contingent liabilities, contingent assets, reimbursement assets as well as significant judgements and estimates.

IFRS model accounts and disclosure checklists
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  • ICAEW Library and Information Service
A list of regularly updated free sources for IFRS model accounts and disclosure checklists.
IAS Plus
  • Website
  • Deloitte

Overviews of each international accounting standard, with a history and timeline of key events and amendments.

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