Under IAS 37, inflows of resources that are "virtually certain" to be received should be:
A) disclosed as contingent assets in the notes to the financial statements.
B) recognized as assets.
C) undisclosed until management is absolutely certain that resources will be received.
D) reported only in the cash flow statement.

Question

Quizplus · Accepted Answer

Under IAS 37, inflows of resources that are "virtually certain" to be received should be recognized as assets. This means that they should be included in the balance sheet and reported as part of the company's assets. Contingent assets, on the other hand, refer to possible assets that may arise from past events, but whose existence and value are uncertain. They are disclosed in the notes to the financial statements rather than recognized as assets. Therefore, choice A is not correct. Choice C is also not correct, as the standard requires recognition of virtually certain inflows of resources as assets. Choice D is not correct, as the cash flow statement only reports cash inflows and outflows, and is not relevant to the recognition of non-cash assets.

Under IAS 37, Inflows of Resources That Are "Virtually Certain