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If an inflow of economic benefits is probable then a contingent asset is disclosed
- a)In the financial statements.
- b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).
- c)In the cash flow statement.
- d)None of the above.
Correct answer is option 'B'. Can you explain this answer?
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If an inflow of economic benefits is probable then a contingent asset ...
Explanation:
Contingent assets are assets that are not recognized in the financial statements but are disclosed in the notes to the financial statements if it is probable that an inflow of economic benefits will arise. These assets are contingent because their realization depends on the occurrence of future events that are beyond the control of the entity.
The disclosure of contingent assets is made in the report of the approving authority, which is the Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise. This is because the approving authority is responsible for making decisions about the entity's operations and is in the best position to assess the likelihood of the contingency being resolved in the entity's favor.
The disclosure of contingent assets in the financial statements or cash flow statement is not appropriate because it may give the impression that the asset is certain when in fact it is not. Therefore, the appropriate place for the disclosure of contingent assets is in the notes to the financial statements, where the nature and extent of the contingency can be described and the likelihood of the inflow of economic benefits can be assessed.
In conclusion, if an inflow of economic benefits is probable, then a contingent asset is disclosed in the report of the approving authority.
Contingent assets are assets that are not recognized in the financial statements but are disclosed in the notes to the financial statements if it is probable that an inflow of economic benefits will arise. These assets are contingent because their realization depends on the occurrence of future events that are beyond the control of the entity.
The disclosure of contingent assets is made in the report of the approving authority, which is the Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise. This is because the approving authority is responsible for making decisions about the entity's operations and is in the best position to assess the likelihood of the contingency being resolved in the entity's favor.
The disclosure of contingent assets in the financial statements or cash flow statement is not appropriate because it may give the impression that the asset is certain when in fact it is not. Therefore, the appropriate place for the disclosure of contingent assets is in the notes to the financial statements, where the nature and extent of the contingency can be described and the likelihood of the inflow of economic benefits can be assessed.
In conclusion, if an inflow of economic benefits is probable, then a contingent asset is disclosed in the report of the approving authority.
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If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer?
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If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If an inflow of economic benefits is probable then a contingent asset is discloseda)In the financial statements.b)In the report of the approving authority (Board of Directors in the case of a company, and the corresponding approving authority in the case of any other enterprise).c)In the cash flow statement.d)None of the above.Correct answer is option 'B'. Can you explain this answer?.
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