Exam 5: Provisions, Contingent Liabilities and Contingent Assets

An event that gives rise to a present obligation, but which cannot be measured with sufficient reliability is an example of a:

The uncertainty that exists in relation to provisions is one of

In respect to a contingent liability, IAS 37 Provisions, Contingent Liabilities and Contingent Assets, requires disclosure of

The following is statement made in IAS 37 Provisions, Contingent Liabilities and Contingent Assets: 'a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it'. This statement provides a definition of:

The costs under an onerous contract are measured using which valuation method?

According to IAS 37 Provisions, Contingent Liabilities and Contingent Assets, the appropriate treatment for a contingent asset in the financial statements of an entity is:

Purcell Limited is a manufacturer of swimming pools and provides its customers with warranties at the time of sale. The warranty applies for three years from the date of sale. Past experience shows that there will be some claims under the warranties. The appropriate treatment of this item under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, is to:

Provisions in relation to which of the following balances are within the scope of IAS 37?

A railway company is required, under law, to overhaul its rail-tracks every three years as a safety measure. The appropriate treatment of this event for the purposes of preparing financial statements is:

A contingent liability is defined as a:

The following statement, contained in IAS 37 Provisions, Contingent Liabilities and Contingent Assets, defines: ' a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity'

Which of the following statements is correct?

Under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, the appropriate accounting treatment for future operating losses is to:

Which of the following is an example of a provision falling within the scope of IAS 37?

For each class of provision, an entity is required under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, to disclose the following information: I The carrying amount at the beginning and end of the period. II Amounts incurred and charged against the provision during the period. III Comparative information. IV Unused amounts reversed during the period. V Additional provisions made during the period.

Provisions shall be recognised when: I an entity has a present obligation II it is possible that an outflow of resources will be required to settle the obligation III the amount of the obligation can be reliably estimated IV there has been a past event

Entities are not required to disclose which of the following in relation to provisions?

Entity A has provided a bank guarantee to a bank in relation to a loan provided to entity B. Entity B is solvent and shows no signs of defaulting on the loan. The treatment of the bank guarantee in the records of entity A is to:

An example of where an entity has a present obligation is:

The June 2005 Exposure Draft issued in relation to proposed changes to IAS 37: