Unformatted text preview: less distant. Significant judgement may be required in measuring the provision. 2010 the IASB issued a limited reexposure of the 2005 proposals, which included a focus on the measurement of provisions involving services, e.g. decommissioning. The project currently is inactive, and the IASB will decide whether or how to progress the project when it considers responses to its Agenda Consultation 2011, which are due by 30 November 2011. Timing of recognition
A present obligation that is more likely than not Decommissioning and environmental provisions are covered by IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Recognition of a provision is required when there is a present obligation and an outflow of resources is probable. Probable is defined as more likely than not. A present obligation can be legal or constructive in nature. For oil and gas companies a legal obligation for decommissioning and remediation often is contained in the licence agreement and related contracts, or in legislation. However, in some countries environmental legislation may be less developed and it may be difficult to determine the extent of the obligation. A constructive obligation may arise from a company's published policies about environmental clean-up or from past practices. An obligation to make good damage or dismantle equipment is provided for in full when the damage is caused or the asset installed. This may result in the recognition of additional amounts or earlier recognition of such amounts in IFRS financial statements compared to previous GAAP . When the provision arises on initial recognition of an asset, the corresponding debit is treated as part of the cost of the related asset and is not recognised immediately in profit or loss. Future developments
The IASB is reviewing accounting for provisions In 2005 the IASB began reviewing the accounting for provisions and an exposure draft was issued, which would have resulted in changes to both the timing of recognition and the measurement of...
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