Which statement is correct about provisions,contingent assets and contingent liabilities?
A)Provisions are recorded in the financial statements whereas contingent assets are not recorded.
B)Provisions are recorded in the financial statements whereas contingent liabilities are not recorded.
C)Probable contingent liabilities are recorded at management's best estimates.
D)Probable contingent assets are recorded at management's best estimates.

Question

Quizplus · Accepted Answer

Provisions are recorded in the financial statements as they are certain to occur and can be measured reliably, whereas contingent assets and contingent liabilities are not recorded in the financial statements as they are uncertain in nature. Probable contingent liabilities are recognized in the financial statements as a disclosure only, based on management's best estimate of the outcome. Probable contingent assets are not recognized in the financial statements.

Which Statement Is Correct About Provisions,contingent Assets and Contingent Liabilities