GLIMPSE OF A CPA'S MIND

Overview IAS 37  Provisions, Contingent Liabilities and Contingent Assets  outlines the accounting for provisions (liabilities of uncertain timing or amount), together with contingent assets (possible assets) and contingent liabilities (possible obligations and present obligations that are not probable or not reliably measurable). Provisions are measured at the best estimate (including risks and uncertainties) of the expenditure required to settle the present obligation, and reflects the present value of expenditures required to settle the obligation where the time value of money is material. IAS 37 was issued in September 1998 and is operative for periods beginning on or after 1 July 1999. History of IAS 37 Date Development Comments August 1997 Exposure Draft E59  Provisions, Contingent Liabilities and Contingent Assets  published September 1998 IAS 37  Provisions, Contingent Liabilities and Contingent Assets issued Operative for annual financial statements covering p

Overview IAS 36  Impairment of Assets  seeks to ensure that an entity's assets are not carried at more than their recoverable amount (i.e. the higher of fair value less costs of disposal and value in use). With the exception of goodwill and certain intangible assets for which an annual impairment test is required, entities are required to conduct impairment tests where there is an indication of impairment of an asset, and the test may be conducted for a 'cash-generating unit' where an asset does not generate cash inflows that are largely independent of those from other assets. IAS 36 was reissued in March 2004 and applies to goodwill and intangible assets acquired in business combinations for which the agreement date is on or after 31 March 2004, and for all other assets prospectively from the beginning of the first annual period beginning on or after 31 March 2004. History of IAS 36 Date Development Comments May 1997 Exposure Draft E55 Impairment of Assets