Objectives of Ias 37 Concerning the Recognition of Provisions
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Objectives of IAS 37 Concerning the Recognition of Provisions
IAS 37 is take effect in the annual financial statements on or after the 1st began in July 1999. Its the standard in the goal was to ensure that there is proper identification criteria and application to measure the basis, or have provisions liabilities and contingent assets and enough information is disclosed in the notes in the financial statements to enable users to understand their nature, timing, and amount. (iasplus [Online] 2011)
Scope of concerning the recognition of provisions is:
This standard applies to all of the provisions of the accounting entity responsibility to liabilities and assets, except those from executory contract, unless the contract is heavy and those who are another standard instead. (worldgaapinfo [Online] 2011)
Executory the contract in both parties are those who had no obligation, and they promise both sides are partly completed, and in the determination of equal its commitment. This standard does not apply to stay to executory the contract, unless they are onerous company. (worldgaapinfo [Online] 2011)
When some other standard to solve a particular type of provision, contingent assets or liabilities, the application of the standard that the entity is not instead. For example, the international financial reporting standards 3 enterprise combination address treatment or liabilities takeover of the hypothesis in a business combination. It also treats certain types of provisions in IAS 11 Construction Contracts, IAS 12 Income Taxes and IAS 17 Leases. (worldgaapinfo [Online] 2011)
Provisions
Provisions is defined as a liability of uncertain timing and amount that making a provision should be recognized three conditions are present obligation on entity as a result of a past event, the obligation included legal obligation and constructive obligation. It will require the transfer of economic benefits to settle the obligation. And also a reliable estimate can be made of the amount involved. (Suzanne Burdis 2011)
The past events which present obligations are a kind of obligating event. For the past events is a constraint cases, the entity must not realistic alternative but to settle the obligation created by events. (Suzanne Burdis 2011)
A specified amount should be best estimate of the obligation in expenditure. If the effect of the time value material, the amount of regulation should calculate the value of the expenditure for settlement obligations. The future event, this may affect the amount needed to solve the obligations should consider when measuring a terms, as long as there is enough objective evidence and these events will occur. (Suzanne Burdis 2011)
If it satisfied those three conditions, it can make a