Contingent Asset – NBC Institute

CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

Question

A company is being sued by a customer in respect of some products supplied which the customer claims are faulty. The customer is suing for GH¢220,000 plus damages. Court costs are likely to amount to GH¢40,000. The company’s lawyer has advised that there is an 80% chance that the case will be lost and that the full amount claimed by the customer will become payable against the company.

The company is fully insured, and the lawyer has advised that the insurance policy covers the event and should be utilized.

Required:
Determine the amount that should be recognized as a provision and charged to profit or loss and determine the treatment of the insurance claim.

Answer

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Tags: Contingent Asset, Insurance Claim, Legal Cases, Provision
Level: Level 3

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: NOV 2020

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

Question

The objective of IAS 37: Provisions, Contingent Liabilities, and Contingent Assets is to ensure that appropriate recognition criteria and measurement bases are applied to provisions, contingent liabilities, and contingent assets, and that sufficient information is disclosed in the notes to the financial statements to enable users to understand their nature, timing, and amount.

Required:
Explain Contingent Liability and Contingent Asset as used in the statement above.
(Total: 3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Asset, Contingent Liability, Disclosure, Financial Reporting, IAS 37
Level: Level 2

Topic: contingent liabilities and contingent assets
Series: JULY 2023

CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

Question

The company is fully insured, and the lawyer has advised that the insurance policy covers the event and should be utilized.

Required:
Determine the amount that should be recognized as a provision and charged to profit or loss and determine the treatment of the insurance claim.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Asset, Insurance Claim, Legal Cases, Provision
Level: Level 3

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: NOV 2020

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

Question

Required:
Explain Contingent Liability and Contingent Asset as used in the statement above.
(Total: 3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Asset, Contingent Liability, Disclosure, Financial Reporting, IAS 37
Level: Level 2

Topic: contingent liabilities and contingent assets
Series: JULY 2023

Question Tag: Contingent Asset

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CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

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CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

You're reporting an error for "CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim"

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

You're reporting an error for "FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)"

CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim

Determine the recognition and treatment of a provision and insurance claim under IAS 37.

You're reporting an error for "CR – Nov 2020 – L3 – Q2c – Provision and Insurance Claim"

FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)

Explanation of contingent liabilities and contingent assets according to IAS 37.

You're reporting an error for "FR – July 2023 – L2 – Q2d – Contingent Liabilities and Assets (IAS 37)"

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