Under current IFRS requirements, a provision is recognized if
A) the amount of the loss can be reliably measured and it is probable that an asset has been impaired or a liability incurred as of the financial statement date.
B) the amount of the loss cannot be measured reliably but it is probable that an asset has been impaired or a liability incurred as of the financial statement date.
C) it relates to a lawsuit commenced after the statement of financial position date, the outcome of which can be reliably measured.
D) it relates to an asset recognized as impaired after the statement of financial position date.

Question

Quizplus · Accepted Answer

A provision is recognized if three conditions are met: (1) the amount of the loss can be reliably measured, (2) it is probable that an asset has been impaired or a liability incurred as of the financial statement date, and (3) the provision is a present obligation (legal or constructive) as a result of past events. Choice B is incorrect because the amount of the loss must be reliably measured. Choice C is incorrect because the provision must relate to an obligation that existed at the financial statement date, not a subsequent event. Choice D is incorrect because the impairment must be recognized as of the financial statement date, not after.

Under Current IFRS Requirements, a Provision Is Recognized If