This document provides definitions and guidance on provisions, contingent liabilities, and contingent assets under accounting standards. It defines a provision as a liability of uncertain timing or amount from a past event expected to result in an outflow of resources. Provisions are recognized if a present obligation exists from a past event, an outflow is probable, and the amount can be reliably estimated. Contingent liabilities are possible obligations depending on uncertain future events, while contingent assets are possible inflows from past events requiring uncertain future events to be confirmed. Contingent liabilities are disclosed but not recognized, while contingent assets are generally not recognized but disclosed if inflows are probable.

1. Welcome

2. Group name:
Youth boomers

3. Member of youth Boomers:
• Anqur Chowdhury - 110106027
• Md. Shipon Mia - 110106060
• Sheikh Mahbub Habib - 130106104

4. Presentation on:
provision, contingent liabilities and
contingent asset

5. Definition of provision:
A provision is a liability of uncertain timing
or amount.
A liability is a present obligation of the
entity arising from past events, the
settlement of which is expected to result in
an outflow from the entity of resources
embodying economic benefits.

6. Recognition of Provisions:
A provision should be recognized:
An entity has a present obligation as a
result of a past event
It is probable that an out flow of resources
embodying economic benefits will be
required to settle the obligation, and
 a reliable can be made of the amount of
the obligation

7. Obligations:
A provision may be necessary as a result of
 A legal or
 A construction obligation

8. Legal obligation
A legal obligation is an obligation that
derives from:
 A contract
 Legislation
 Other operation of law

9. Constructive obligation:
A constructive obligation is an obligation that
derives from an entity a actions where:
 By an established pattern of past practice,
published polices or a sufficiently specific
current statement, the entity has indicated
to other parties that it will accept certain
responsibilities.

10. Measuring provisions
 a realistic estimate
 a prudent estimate of the expenditure
needed to settle the obligation existing at
the reporting date
 discounted whenever the effect of this is
material

11. Restructurings:
A restructuring is
sale or termination of a line of business
closure of business locations
changes in management structure
Fundamental reorganizations.

12. Use of provisions:
 Provisions should only be used for the
purpose for which they were originally
recognized. They should be reviewed at
each balance sheet date and adjusted to
reflect the current best estimate. If it is no
longer probable that an outflow of
resources will be required to settle the
obligation, the provision should be
reversed.

13. Definition of Contingent liability
a possible obligation depending on
whether some uncertain future event
occurs, or
at present obligation but payment is not
probable or the amount cannot be
measured reliably

14. Relationship between provisions
and contingent liabilities:
(a) Provisions – which are recognized as
liabilities because they are present
obligations and it is probable that an
outflow of resources embodying Economic
benefits will be required to settle the
obligations; and

15. (b) Contingent liabilities – which are not
recognized as liabilities because they are either
I. Possible obligations, as it has yet to be
confirmed whether the entity has a present
Obligation that could lead to an outflow of
resources embodying economic benefits; or
II. Present obligations that do not meet the
recognition criteria in this Standard

16. Contingent assets:
A contingent asset is a possible that arises
from past event whose existence will bee
confirmed only by the occurrence or non-
occurrence of one or more uncertain future
events not wholly within the control of the
entity.

17. Accounting for contingent liabilities:
Contingent liabilities:
 Should not be recognized in the
statement of financial position itself
 Should be disclosing red in a note unless
the possibility of a transfer of economic
benefits is remote.

18. Accounting for contingent assets:
Contingent assets should not generally be
recognized but if the possibility of inflows
of economic benefits is problem. they
should be disclosed
If a gain is virtually certain. if falls within
the definition of an asset and should be
recognized as such. Not as a contingent
asset.

19. Disclosure of contingencies:
The principal disclosure requirements
regarding contingencies are:
The nature of the contingency
The uncertainties expected to affect the
ultimate outcome.
An estimate f the potential effect.

20. Any question
?

21. Thank you
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