ACCOUNTING STANDARD-4 CONTINGENCIES AND EVENTS OCCURING AFTER THE  BALANCE SHEET DATE J.P., KAPUR & UBERAI
PURPOSE <ul><li>This statement deals with the treatment in the financial statements of: </li></ul><ul><li>Contingencies an...
CONTINGENCY <ul><li>Contingency :   is a  condition  or  situation , the ultimate outcome of which,  gain  or  loss , will...
ACCOUNTING TREATMENT OF CONTINGENT LOSSES <ul><li>If the contingency is  likely  to result in a loss, then it is prudent t...
ACCOUNTING TREATMENT OF CONTINGENT GAINS <ul><li>Contingent gains  should   not  be   recognized in financial statements. ...
DISCLOSURE <ul><li>If any of the specified two conditions are not met, the  existence of a contingent loss should be discl...
EVENTS OCCURING AFTER THE BALANCE SHEET DATE <ul><li>Events occurring after the balance sheet date:  those  significant  e...
DISCLOSURE <ul><li>The nature of the event </li></ul><ul><li>An estimate of the financial effect or a statement that such ...
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As 04

  1. 1. ACCOUNTING STANDARD-4 CONTINGENCIES AND EVENTS OCCURING AFTER THE BALANCE SHEET DATE J.P., KAPUR & UBERAI
  2. 2. PURPOSE <ul><li>This statement deals with the treatment in the financial statements of: </li></ul><ul><li>Contingencies and. </li></ul><ul><li>Events occurring after the balance sheet date. </li></ul><ul><li>This statement does not deal with: </li></ul><ul><li>Liabilities of life assurance and general insurance enterprises arising from policies issued. </li></ul><ul><li>Obligations under retirement benefit plans. </li></ul><ul><li>Commitments arising from long-term lease contracts </li></ul>J.P., KAPUR & UBERAI
  3. 3. CONTINGENCY <ul><li>Contingency : is a condition or situation , the ultimate outcome of which, gain or loss , will be known or determined only on the occurrence , or non-occurrence , of one or more uncertain future events. </li></ul>J.P., KAPUR & UBERAI
  4. 4. ACCOUNTING TREATMENT OF CONTINGENT LOSSES <ul><li>If the contingency is likely to result in a loss, then it is prudent to provide for that loss in the financial statements. </li></ul><ul><li>The amount of a contingent loss should be provided for by a charge to the statement of profit and loss if: </li></ul><ul><li>It is probable that future events will confirm that, after taking into account any related probable recovery, an asset has been impaired or a liability has been incurred as at the balance sheet date . </li></ul><ul><li>A reasonable estimate of the amount of the resulting loss can be made. </li></ul>J.P., KAPUR & UBERAI
  5. 5. ACCOUNTING TREATMENT OF CONTINGENT GAINS <ul><li>Contingent gains should not be recognized in financial statements. </li></ul>J.P., KAPUR & UBERAI
  6. 6. DISCLOSURE <ul><li>If any of the specified two conditions are not met, the existence of a contingent loss should be disclosed in the financial statements as under, unless the possibility of a loss is remote: </li></ul><ul><li>Nature of contingency </li></ul><ul><li>The uncertainties which may effect the future outcome </li></ul><ul><li>An estimate of the financial effect, or a statement that such an estimate cannot be made. </li></ul>J.P., KAPUR & UBERAI
  7. 7. EVENTS OCCURING AFTER THE BALANCE SHEET DATE <ul><li>Events occurring after the balance sheet date: those significant events, both favourable and unfavourable , that occur between the balance sheet date and the date on which the financial statements are approved by the Board of Directors in the case of a company, and by the corresponding approving authority in the case of any other entity. </li></ul><ul><li>Classification of Events: </li></ul><ul><li>Those which provide further evidence of conditions that existed at the balance sheet date; and </li></ul><ul><li>Those which are indicative of conditions that arose subsequent to the balance sheet date. </li></ul>J.P., KAPUR & UBERAI
  8. 8. DISCLOSURE <ul><li>The nature of the event </li></ul><ul><li>An estimate of the financial effect or a statement that such an estimate cannot be made. </li></ul>J.P., KAPUR & UBERAI

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