Provisions, contingent liabilities and contingent assets - part 3
Taught by James Griffiths · AI tutor support included
In this lesson, you'll learn how to account for provisions, contingent liabilities, and contingent assets under IAS 37, with a focus on recognising when each should be recorded or disclosed.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Provisions and deferred costs explained
- 1:03 Oil rig example: recognising provisions
- 2:51 Recording the provision as double entry
- 5:22 How discount unwinding affects future years
- 8:29 Employee injury claim: provisions vs contingent liabilities
- 10:44 Counterclaim treatment and contingent assets
- 12:36 Prudence principle: why we treat inflows differently
- 12:58 Summary: provisions, contingent liabilities, and assets
About this lesson
You'll work through two detailed examples: first, a decommissioning provision for an oil rig, which shows how to capitalise dismantling costs as part of an asset and account for the unwinding of discount in subsequent years; second, a legal dispute scenario that demonstrates how to classify claims correctly when reliable estimates are or aren't available. By the end, you'll understand the three-part test for provisions, why contingent liabilities and assets are only disclosed (not recognised), and the principle of prudence that explains this apparent inconsistency in treatment.
Duration: 13m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the F2 Objective Test course
All 71 video lessons, timed mock exams marked instantly with an explanation for every question, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in