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.

Question

Quizplus · Accepted Answer

According to the AASB Framework, a liability is defined 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. Therefore, if there is no entity other than the reporting entity involved in the present obligation, it cannot be considered a liability.

Some Provisions Traditionally Recorded by Entities May Not Be Considered