FAC3701 SU7-IAS 37-
Summary Notes
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IAS 37 Provisions and Con,ngencies
Con;ngent
Framework Provision
liability
Defini1on: Defini1on: Defini1on:
• Present obliga;on • Liability • Possible obliga;on
• Past event • Uncertain ;ming or amount OR
• OuNlow of economic benefits Recogni1on: • Present obliga;on
More likely
Recogni1on: • Present obliga;on as a result BUT
than not
• OuNlow probable of a past event (avoidance • OuNlow ≠ probable
test)
• Reliably measurable AND/OR
- legal
• Amount ≠ reliable es;mate
- construc;ve
If met, recognise in statement of Very rare!
financial posi;on • OuNlow probable
If as above, NO recogni;on in
• Reliable es;mate of amount statement of financial posi;on
Instead, disclosure provided
If met, recognise in statement of
financial posi;on
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
,Visit www.tabaldi.org for a range of UNISA products Visit www.tabaldi.org for a range of UNISA products
IAS 37 – Class Example
IDENTIFY LIABILITIES THAT ARE
PROVISIONS
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
, Visit www.tabaldi.org for a range of UNISA products Visit www.tabaldi.org for a range of UNISA products
Iden;fy provisions -‐ Example
a) Provision for bad debts
b) Provision for leave pay (assume accumula;ng and ves;ng)
c) Standard warranty to repair any faults that occur aYer customer has
purchased goods
d) Telephone bill received but not yet paid
e) Freight costs incurred on transport of goods to your premises
(invoice not yet received)
f) Obliga;on to dismantle a plant and restore the site at the end of its
useful life
Required: Which of the above liabili;es are provisions
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
Summary Notes
,Visit www.tabaldi.org for a range of UNISA products Visit www.tabaldi.org for a range of UNISA products
IAS 37 Provisions and Con,ngencies
Con;ngent
Framework Provision
liability
Defini1on: Defini1on: Defini1on:
• Present obliga;on • Liability • Possible obliga;on
• Past event • Uncertain ;ming or amount OR
• OuNlow of economic benefits Recogni1on: • Present obliga;on
More likely
Recogni1on: • Present obliga;on as a result BUT
than not
• OuNlow probable of a past event (avoidance • OuNlow ≠ probable
test)
• Reliably measurable AND/OR
- legal
• Amount ≠ reliable es;mate
- construc;ve
If met, recognise in statement of Very rare!
financial posi;on • OuNlow probable
If as above, NO recogni;on in
• Reliable es;mate of amount statement of financial posi;on
Instead, disclosure provided
If met, recognise in statement of
financial posi;on
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
,Visit www.tabaldi.org for a range of UNISA products Visit www.tabaldi.org for a range of UNISA products
IAS 37 – Class Example
IDENTIFY LIABILITIES THAT ARE
PROVISIONS
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
, Visit www.tabaldi.org for a range of UNISA products Visit www.tabaldi.org for a range of UNISA products
Iden;fy provisions -‐ Example
a) Provision for bad debts
b) Provision for leave pay (assume accumula;ng and ves;ng)
c) Standard warranty to repair any faults that occur aYer customer has
purchased goods
d) Telephone bill received but not yet paid
e) Freight costs incurred on transport of goods to your premises
(invoice not yet received)
f) Obliga;on to dismantle a plant and restore the site at the end of its
useful life
Required: Which of the above liabili;es are provisions
FAC3701-SU7-IAS 37-Summary Notes Copyright Tabaldi Education(Pty)Ltd
