PPT: Accounting Standards (4) | Advanced Accounting for CA Intermediate PDF Download

 Page 1


Objectives
• 1. deals with the treatment in financial statement of
a)Contingencies
b)events occurring after the balance sheet    date
• 2. The following subjects, which may result in 
contingencies, are excluded from the scope of this Standard 
in view of special considerations applicable to them:
• a) liabilities of life assurance and general insurance 
enterprises arising from policies issued
• b) obligations under retirement benefit plans; and 
• c) commitments arising from long-term lease contracts.
Page 2


Objectives
• 1. deals with the treatment in financial statement of
a)Contingencies
b)events occurring after the balance sheet    date
• 2. The following subjects, which may result in 
contingencies, are excluded from the scope of this Standard 
in view of special considerations applicable to them:
• a) liabilities of life assurance and general insurance 
enterprises arising from policies issued
• b) obligations under retirement benefit plans; and 
• c) commitments arising from long-term lease contracts.
Contingency
Page 3


Objectives
• 1. deals with the treatment in financial statement of
a)Contingencies
b)events occurring after the balance sheet    date
• 2. The following subjects, which may result in 
contingencies, are excluded from the scope of this Standard 
in view of special considerations applicable to them:
• a) liabilities of life assurance and general insurance 
enterprises arising from policies issued
• b) obligations under retirement benefit plans; and 
• c) commitments arising from long-term lease contracts.
Contingency
Definition
A 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.
Estimates are required for determining the amounts to
be stated in the financial statements for many on-going
and recurring activities of an enterprise
The uncertainty relating to future events can be
expressed by a range of outcomes
The estimates of the outcome and of the financial
effect of contingencies are determined by the
judgment of the management of the enterprise
Page 4


Objectives
• 1. deals with the treatment in financial statement of
a)Contingencies
b)events occurring after the balance sheet    date
• 2. The following subjects, which may result in 
contingencies, are excluded from the scope of this Standard 
in view of special considerations applicable to them:
• a) liabilities of life assurance and general insurance 
enterprises arising from policies issued
• b) obligations under retirement benefit plans; and 
• c) commitments arising from long-term lease contracts.
Contingency
Definition
A 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.
Estimates are required for determining the amounts to
be stated in the financial statements for many on-going
and recurring activities of an enterprise
The uncertainty relating to future events can be
expressed by a range of outcomes
The estimates of the outcome and of the financial
effect of contingencies are determined by the
judgment of the management of the enterprise
Explanation
• The term “contingencies” used in this Standard is
restricted to conditions or situations at the
balance sheet date, the financial effect of which is
to be determined by future events which may or
may not occur.
• Estimates are required for determining the
amounts to be stated in the financial statements
for many on-going and recurring activities of
an enterprise. One must, however, distinguish
between an event which is certain and one which
is uncertain. The fact that an estimate is involved
does not, of itself, create the type of uncertainty
which characterizes a contingency
Page 5


Objectives
• 1. deals with the treatment in financial statement of
a)Contingencies
b)events occurring after the balance sheet    date
• 2. The following subjects, which may result in 
contingencies, are excluded from the scope of this Standard 
in view of special considerations applicable to them:
• a) liabilities of life assurance and general insurance 
enterprises arising from policies issued
• b) obligations under retirement benefit plans; and 
• c) commitments arising from long-term lease contracts.
Contingency
Definition
A 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.
Estimates are required for determining the amounts to
be stated in the financial statements for many on-going
and recurring activities of an enterprise
The uncertainty relating to future events can be
expressed by a range of outcomes
The estimates of the outcome and of the financial
effect of contingencies are determined by the
judgment of the management of the enterprise
Explanation
• The term “contingencies” used in this Standard is
restricted to conditions or situations at the
balance sheet date, the financial effect of which is
to be determined by future events which may or
may not occur.
• Estimates are required for determining the
amounts to be stated in the financial statements
for many on-going and recurring activities of
an enterprise. One must, however, distinguish
between an event which is certain and one which
is uncertain. The fact that an estimate is involved
does not, of itself, create the type of uncertainty
which characterizes a contingency
Contingencies(other than covered by 
AS-29)
Cotingencies
(other than 
covered by AS-
29)
Existing 
Condition or 
situation at the 
balance sheet 
date
Contingencies loss 
Expected Loss May be
1.Probable loss
2.Reasonably Possible
3. Remote
Contingencies Gaain
Covered By AS 29
Condition or situation 
after the Balance sheet 
date
No accounting 
Treatment is 
required,neither by way 
of provision nor by 
giving  accounting notes