BU397 Chapter Notes - Chapter 13: Financial Statement
Document Summary
Probably outflow and resources embodying economic benefits: the potential outflow of resources must be probable. If it is not probable, than, note disclosure is required. If a provision is not estimable, which is rare, than it becomes a conditional liability, than note disclosure is required. Non-financial liabilities: an entity must accrue the best estimate of the amount to settle the present obligation. Best estimate: the amount that an entity would rationally pay to settle the present obligation at the date of the statement: entities must gather evidence to support the assessment of best estimate, future events. Entities may consider future events if there is sufficient evidence regarding the occurrence of the events when estimating provisions. No gains are taken into income for assets that are expected to be sold when considering future events: because they are not yet realized, reimbursements. In some cases, some of the cash outflows will be reimbursed.