Exam 8: Provisions, Contingent Liabilities and Contingent Assets

The following is statement made in AASB 137 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:

Contingent liabilities are:

According to AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the appropriate treatment for a contingent asset in the financial statements of an entity is:

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

At balance sheet date, Raschella Limited was awaiting the final details of a court case for damages awarded in its favour. The amount and possible receipt of damages is unknown and will not be decided until the court sits again in several months' time. How is this event dealt with in the preparation of the financial statements?

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:

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

The uncertainty that exists in relation to provisions is one of:

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

An entity sells goods under warranty and past experience shows that minor defects account for 10% of sales and major defects account for 2% of sales. If all minor defects were repaired the warranty cost would be $300 000, and if all major defects were repaired the warranty cost would be $800 000. The expected value of the warranty cost is:

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:

Liabilities which fail the recognition criteria and where the possibility of an outflow is remote should:

Under AASB 137 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 AASB 137?

The following statement, contained in AASB 137 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'

According to AASB 137 Provisions, Contingent Liabilities and Contingent Assets, when providing for the future, a future event such as the clean-up of a contaminated site, gains and other cash inflows that are expected to arise on the sale of asset related to the clean-up, must be treated as follows:

McCann Limited announced its plans for a major restructuring of its operations. Under AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the entity is able to:

Which of the following statements is correct?

Which of the following statements is correct?