Meet the definitions
5.6 Only items that meet the definition of an asset, a liability or equity are recognised in the statement of financial position. Similarly, only items that meet the definition of income or expenses are recognised in the statement(s) of financial performance. However, not all items that meet the definition of one of those elements are recognised.
Unfortunately disputes may arise between an entity and a third party, employee, manager, director and these disputes may result in legal action being entered into between the parties. The issue giving rise to the provision (or contingent liability) might not have reached the legal stage, but making disclosures as required in IAS 37 sub 92 (see below) on the subject matter of the dispute might seriously prejudice the position of the reporting entity involved in the dispute.
Provisions and Contingencies – Introduction
21.1 Provisions and Contingencies applies to all provisions (ie liabilities of uncertain timing or amount), contingent liabilities and contingent assets except those provisions covered by other sections of Provisions and Contigencies. These include provisions relating to:
- leases (See Leases). However, this section deals with operating leases that have become onerous.
- construction contracts (See Revenue). However this section deals with construction contracts that have become onerous.
- employee benefit obligations (See Employee Benefits).
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Exceptions to the recognition or measurement principles
21 This IFRS provides limited exceptions to its recognition and measurement principles. Exception to the recognition principle, Exceptions to both the recognition and measurement principles and Exceptions to the measurement principle (all listed below) specify both the particular items for which exceptions are provided and the nature of those exceptions. The acquirer shall account for those items by applying the requirements in in the above mentioned three sections, which will result in … Continue reading
Business Combinations and Goodwill
19.1 Business Combinations and Goodwill applies to accounting for business combinations. It provides guidance on identifying the acquirer, measuring the cost of the business combination and allocating that cost to the assets acquired and liabilities and provisions for contingent liabilities assumed. It also addresses accounting for goodwill both at the time of a business combination and subsequently.
Business Combinations and Goodwill – Exeptions