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Unformatted text preview: .05). GAAP rec ognizes a c ont ingent liabilit y when it is likely (or
t here is a high c hanc e) t hat a f ut ure event will c onf irm t hat a liabilit y had been inc urred at t he
f inanc ial st at ement dat e; and t he amount of loss c an be reasonably est imat ed. Do not rec ognize
a c ont ingent liabilit y if it is unlikely, where t he c hanc es of oc c urrenc e of f ut ure event s is slight
or not det erminable, or c annot be reasonably est imat ed.
Ac c ount ing f or c ont ingenc ies is part of a broader int ernat ional st andard, IAS 37, “Provisions,
Cont ingent Liabilit ies, and Cont ingent Asset s.” Ac c ording IF RS, a c ont ingent liabilit y is
rec ognized only if it meet s t he def init ion of a liabilit y and c an be reliably measured, and
management c onsiders all available evidenc e t o det ermine t he exist enc e of an obligat ion.
Disclosures are similar t o IF RS (IAS 37) wit h inc reased requirement s in sit uat ions where
liabilit ies are not rec ognized due t o lac k of reliabilit y of measurement and sit uat ions of
unc ert aint y of exist e...
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This note was uploaded on 02/05/2014 for the course BUS 370 taught by Professor Andreathomas during the Spring '13 term at Capital University.
- Spring '13