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PAS 37 Answers
PAS 37 Answers
Financial liabilities are initially recognized at cost, at fair value of the assets and liabilities received in
exchange for the liabilities incurred, fair value of the liability at the date incurred.
Non-financial liabilities are initially and subsequently recognized at the amount or estimates
assigned to it. (assigned monetary amount which in some instances must be estimated)
NOTE: Uncertainty of timing and the amount do not disqualify the obligation from being classified
as a liability
Provision
There is a probable outflow of resources embodying economic benefit that will be used to
settle the obligation however the timing of settlement is not definite and the amount of
outflow can only be measured based on reasonable estimates.
The existence as of the reporting date is certain since it has meet the definition of the
liability but uncertain as to its timing or amount.
Contingent liability is recognized when (1) existence is uncertain as of the end of the reporting
period or (2) when the amount of the obligation cannot be reliably estimated regardless as to
whether there is a probable outflow:
REASONS:
(1) There is no present obligation since it doesn’t meet the definition of liability
(2) Even if it meets the definition, no reasonable amount can be assigned to the item even with
the use of reliable estimates.
Probable
Remote = Ignore
MEASUREMENT
Provisions initially measured @ best estimates of the expenditure required to settle the obligation
at the end of the reporting period, considering: