Question

In: Accounting

Per IFRS, a contingent item with a probability of 65% would be considered to be: Select...

Per IFRS, a contingent item with a probability of 65% would be considered to be:

Select one:

a. Probable

b. More than probable

c. A provision

d. Less than probable

Solutions

Expert Solution

Answer: Option A - Probable
A contingent item with a probability of 65% would be considered as Probable
In terms of likelihood of an event if the probability is between 60% to 85% then it
considered as probable
Additional Explaination for Option c)
A provision can be made as per IFRS if 3 conditions are satisfied
i) Present obligation from Past Event
ii) Outflow of economic benefit is probable
iii) Amount can be reliabily estimated
In this question since the data regarding these conditions is not mentioned therefore
anything cannot be commented regarding making of a provision for Contingent item

ekkarill92 answered 2 years ago
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