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ACCA FR知识点：Probable outflow

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发布时间：2021-09-16 10:47

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Probable outflow

The final criteria required is that there needs to be a probable outflow of economic resources.There is no specific guidance of what percentage likelihood is required for an outflow to be probable.A probable outflow simply means that it is more likely than not that the entity will have to pay money.【点击免费下载>>>更多ACCA学习相关资料】

If it appears that there is a possible outflow then no provision is recorded.In this situation,a contingent liability would be reported.A contingent liability is simply a disclosure note shown in the notes to the accounts.There is no double entry recorded in respect of this.Instead,a description of the event should be given to the users with an estimate of the potential financial effect.In addition to this,the expected timing of when the event should be resolved should also be included.

Similar to the concept of a contingent liability is the concept of a contingent asset.A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.Like a contingent liability,a contingent asset is simply disclosed rather than a double entry being recorded.Again,a description of the event should be recorded in addition to any potential amount.The key difference is that a contingent asset is only disclosed if there is a probable future inflow,rather than a possible one.The table below shows the treatment for an entity depending on the likelihood of an item happening.

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It can be seen here that Rey Co could only recognise an asset from a potential inflow if the realisation of income is virtually certain.

EXAMPLE–Likelihood

Rey Co’s legal advisors continue to believe that it is likely that Rey Co will lose the court case against the employee and have to pay out$10m.However,it has come to light that Rey Co may have a counter claim against the manufacturer of the machinery.The legal advisors believe that there is an 80%chance that the counter claim against the manufacturer is likely to succeed and believe that Rey Co would win$8m.

In this case,Rey Co would include a provision for the$10m legal provision in liabilities.Even though there is a similar likelihood that Rey Co would win the counterclaim,this is a probable inflow and therefore only a contingent asset can be recorded.This will be disclosed in the notes to the financial statements rather than being recorded as an asset in the statement of financial position.Whilst this seems inconsistent,this demonstrates the asymmetry of prudence in this standard,that losses will be recorded earlier than potential gains.