IFRS uses specific terminology to refer to the likelihood of the occurrence of an organizational event.Which of the following would need to provide for the recognition of the obligation (i.e.the financial statements adjusted)?
A)outflow of resources is required,but cannot be reliably estimated
B)probable that an outflow of resources is required
C)likelihood is remote
D)amount is yet to be confirmed

Question

Quizplus · Accepted Answer

According to IFRS, when it is probable that an outflow of resources is required, an obligation must be recognized in the financial statements. The other options do not meet the recognition criteria. Option A states that an outflow of resources is required but cannot be reliably estimated, and therefore no recognition can be made. Option C specifies that the likelihood is remote, which means that no recognition is needed. Option D implies that the amount is uncertain, and therefore recognition cannot be made until it is confirmed.

IFRS Uses Specific Terminology to Refer to the Likelihood of the Occurrence