When a contingency must be accrued under IFRS, the charge is referred to as
A) an endowment.
B) a provision.
C) an appropriation.
D) a risk expense.

Question

Quizplus · Accepted Answer

Under IFRS, when a contingency must be accrued, the charge is referred to as a provision. This is because a provision is recognized when an entity has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

When a Contingency Must Be Accrued Under IFRS, the Charge