IAS 37: Provisions, Contingent Liabilities and Contingent Assets

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

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 – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

Question

The definition of a liability forms an important element of the International Accounting
Standards Board’s Framework for the Preparation and Presentation of Financial Statements
which, in turn, forms the basis for IAS 37: Provisions, Contingent Liabilities and Contingent
Assets.

Required

Define liability and describe the circumstances under which provisions should be recognized.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Assets, Contingent Liabilities, Financial Reporting, IAS 37, IFRS Standards, Provisions
Level: Level 2

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: DEC 2022

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

Question

entity has decided to reduce the remaining useful life of the plant by 5 years. For the current year ended 30 April 2023, no entry has been made for depreciation on the plant, neither has there been any adjustments to decommissioning cost.

Item	Amount (GH¢)
Carrying value of the plant	6,000,000
Remaining useful life	11 years
Revaluation surplus	960,000
Provision for decommissioning	1,600,000

There is no change in the expected decommissioning cost except for the timing due to the change in useful life. The applicable discount rate is 11% per annum. Odehyieba Plc has a policy of transferring revaluation surplus to retained earnings only upon disposal.

Required:
Advise on the appropriate financial reporting treatment for the above in the books of Odehyieba Plc in the 2023 financial statements for the year ended 30 April 2023. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Liabilities and Contingent Assets, Decommissioning Costs, Depreciation, Discount rate, Financial Reporting, Revaluation Surplus
Level: Level 3

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: NOV 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 – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

Question

Required

Define liability and describe the circumstances under which provisions should be recognized.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Assets, Contingent Liabilities, Financial Reporting, IAS 37, IFRS Standards, Provisions
Level: Level 2

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: DEC 2022

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

Question

Item	Amount (GH¢)
Carrying value of the plant	6,000,000
Remaining useful life	11 years
Revaluation surplus	960,000
Provision for decommissioning	1,600,000

Required:
Advise on the appropriate financial reporting treatment for the above in the books of Odehyieba Plc in the 2023 financial statements for the year ended 30 April 2023. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contingent Liabilities and Contingent Assets, Decommissioning Costs, Depreciation, Discount rate, Financial Reporting, Revaluation Surplus
Level: Level 3

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets
Series: NOV 2023

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

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

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

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

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

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

FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

Our offerings

Contact Info

Customer

Get In Touch

Topic: IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

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 – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

You're reporting an error for "FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions"

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

You're reporting an error for "CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets"

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 – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions

This question asks candidates to define liabilities and describe circumstances under which provisions should be recognized.

You're reporting an error for "FR – Dec 2022 – L2 – Q5b – Definition of Liability and Provisions"

CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets

Advice on the depreciation adjustment and decommissioning cost for a plant in the books of Odehyieba Plc, including financial statement impacts.

You're reporting an error for "CR – Nov 2023 – L3 – Q2b – IAS 37: Provisions, Contingent Liabilities and Contingent Assets"

Our offerings

Contact Info

Customer

Get In Touch

admin