Some provisions traditionally recorded by entities may not be considered liabilities under the AASB Framework because:
A) Their amounts are not considered probable.
B) They do not involve a future sacrifice of economic benefits.
C) The identity of the external party to whom the present obligation is owed is unknown.
D) There is no entity other than the reporting entity involved in the present obligation as a result of past transactions or other past events.
E) None of the given answers.

Question

Quizplus · Accepted Answer

The AASB Framework defines a liability as a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Option D states that there is no entity other than the reporting entity involved in the present obligation as a result of past transactions or other past events, which means that there is no obligation to an external party and therefore not a liability under the AASB Framework.

Some Provisions Traditionally Recorded by Entities May Not Be Considered