Which of these items would not meet the definition of a liability under the IASB Framework and the current accounting standards?
i.A provision for uninsured losses
ii.An unconditional purchase obligation
iii.Accrued long service leave.

Question

Quizplus · Accepted Answer

A liability, according to the IASB Framework, is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits. An unconditional purchase obligation (ii) and accrued long service leave (iii) both meet this definition as they represent present obligations that will likely require an outflow of resources. However, a provision for uninsured losses (i) also meets the definition of a liability, as it is a present obligation (based on a past event) that is expected to result in an outflow of resources. Therefore, all given options technically meet the definition of a liability, making the question's premise slightly misleading. However, based on the choices provided and interpreting the question as asking which is least likely to be considered a typical liability, none of the options perfectly fits as "not meeting the definition of a liability." Each example given can be considered a liability under the IASB Framework.

Which of These Items Would Not Meet the Definition of a Liability