A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements. Comment and explain, whether the above provision meets the requirements of IAS 37? can you please answer me ?
oh I delighted realy, I got info. about you from my instructor of Advansed Accounting. I greatly want to appreciate you. You are giving us huge asset un perishable asset realy. Your lecture solved my problem as all. Thank you very mach
hello Silvia, thanks for sharing this nice video. I have one question related to provision which is unused provision say for restructuring provision part amount is unused sitting in my balance sheet .Therefore what should be proper accounting treatment for this? Shall i used this unused provision to some other provision directly or will hit back amount first in profit & Loss than form there i will use amount to some other provision.
A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements. Comment and explain, whether the above provision meets the requirements of IAS 37? Can you please answer me ??
hi silvia , what you are dng is just amazing but a small suggestion, instead of giving a direct link of site in description area plz provide a specific descriptions which makes a time saving for us thank you...
Good lectures on IAS 37. please i need a clarification on comparing and contrasting the requirement of IFRS 3 and IAS 37 in respect of restructuring provisions and contingent liabilities.
Hi this is great. thanks for posting this detail explanation of IAS 37. I have a specific case that I'm still not clear about, hope you could help to clarify. Specifically, this has to do with the airlines industry, where leased aircraft, and sometime purchased aircraft, have major future maintenance costs associated with them, for the life of the asset. These costs often are detailed in the lease agreements, or maintenance agreement in the case of purchased aircraft. The maintenance costs, therefore should be provisioned for. But since the provision will be quite large, and are spread over a long period of time, I imagine we should not expense the whole amount upfront in year when the assets are acquired (leased or otherwise). How should I treat this provision in the first year, and how should I "expense" them when the cost are due. Should I book a corresponding asset account (pre-payment?) against the provision entry in the first year? Then as the aircraft as used (by hour flown), amortize that assets account against a reversal of the original provision? In this case, should I also book an expense against cash to recognize the actual maintenance expenses? Thanks for your help!
Hi Viet, sorry for the terribly late response - I respond to similar questions directly on my web. Well, when you assume the future maintenance costs, you do NOT make a provision, but you capitalize them in the cost of your asset when they occur. Then you depreciate them separately, over the period until the next maintenance. It's in IAS 16.
A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements. Comment and explain, whether the above provision meets the requirements of IAS 37? can you please answer me ?
Hi, I have an URGENT question, my exam is Tuesday. I was doing some question practice, and came across one which created a provision for a court case (it was highly likely the company would have to pay the other party). My question is, if a provision must be a present obligation, how can a court case be a provision. The same goes for when a company creates a provision for doubtful debts. How can the outcome of a court case be a provision, if it has no outcome yet?
If it's that URGENT :) - the present obligation must have arisen based on some past event. Your past event here is not the court proceedings and their outcome themselves, but the act that lead to the court (you damaged something, caused something, harmed someone...). So there is a past event. Then you assess the probability of having to pay. If it is highly likely that you will have to pay based on expected result of your court, then you have a present obligation here, even if the court proceedings have not been finished yet. That's coming from the standard. As for doubtful debts - this is a completely different story. I don't like to call it "provision", because it is NOT a provision under IAS 37. Instead, it is an impairment of financial assets, you need to follow IFRS 9, not IAS 37 in this case, thus you are NOT assessing any present obligation, past event or so. You are assesing expected credit loss instead.
Why on God's green earth you would consolidate CONTINGENT LIABILITY? It is just mentioned in the disclosure NOT AN ACTUAL LIABILITY BOOKED in the book.
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Silvia, you're the best. Couldn't find anyone better than you. You're simply remarkable.
So helpful Silvia. Thank you very much! Understood clearly :) So confident about IAS 37 now.
Your explanation is much better than my lecture!!! Thank you so much for sharing!
A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements.
Comment and explain, whether the above provision meets the requirements of IAS 37?
can you please answer me ?
There is no obligation to replace the machinery, hence condition is violated, cannot charge a provision.
oh I delighted realy, I got info. about you from my instructor of Advansed Accounting. I greatly want to appreciate you. You are giving us huge asset un perishable asset realy. Your lecture solved my problem as all. Thank you very mach
This summaried everything perfectly, thank you so much
Thank you for doing this, Silvia. You helped me a lot! God bless you with your life and career!
Thanks Silva, Deby from Nigeria 🇳🇬 👏 🙌 👍
Amazing. Well understood. Many thanks Silvia🙏
Silvia, you really are an excellent teacher.
love your work i learn a lot from this channel
Very good efforts for IFRS revision and understanding, thanks Silvia.
Great presentation! Thanks Silvia
your sessions are very helpful.. thanks a lot.
I'm well equipped with the foundations of complex understandings. Thanks a Ton!
Great summary, thank you for your work, Silvia
Your way of teaching is amazing! Your video helped me a lot to clear basic concepts wrt IAS 37. Best wishes for you mam :)
Thank you!! Could do with you being my lecturer I would understand more
hello Silvia, thanks for sharing this nice video. I have one question related to provision which is unused provision say for restructuring provision part amount is unused sitting in my balance sheet .Therefore what should be proper accounting treatment for this? Shall i used this unused provision to some other provision directly or will hit back amount first in profit & Loss than form there i will use amount to some other provision.
Thank you for doing this Silvia.
too helpful....thanks for knowledge sharing!
A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements.
Comment and explain, whether the above provision meets the requirements of IAS 37?
Can you please answer me ??
Thank you Sylvia for wonderful videeo. Please do some videos on IPSAS too.
hi silvia , what you are dng is just amazing
but a small suggestion, instead of giving a direct link of site in description area plz provide a specific descriptions which makes a time saving for us
thank you...
East west Silvia you are the best
I have learned a lot of this video.thank you so much
Good one. Thank you.
Good lectures on IAS 37. please i need a clarification on comparing and contrasting the requirement of IFRS 3 and IAS 37 in respect of restructuring provisions and contingent liabilities.
very helpful ..where to get ifrs kit ? is this on youtybe?
Hi this is great. thanks for posting this detail explanation of IAS 37. I have a specific case that I'm still not clear about, hope you could help to clarify.
Specifically, this has to do with the airlines industry, where leased aircraft, and sometime purchased aircraft, have major future maintenance costs associated with them, for the life of the asset. These costs often are detailed in the lease agreements, or maintenance agreement in the case of purchased aircraft. The maintenance costs, therefore should be provisioned for. But since the provision will be quite large, and are spread over a long period of time, I imagine we should not expense the whole amount upfront in year when the assets are acquired (leased or otherwise).
How should I treat this provision in the first year, and how should I "expense" them when the cost are due. Should I book a corresponding asset account (pre-payment?) against the provision entry in the first year? Then as the aircraft as used (by hour flown), amortize that assets account against a reversal of the original provision? In this case, should I also book an expense against cash to recognize the actual maintenance expenses?
Thanks for your help!
Hi Viet, sorry for the terribly late response - I respond to similar questions directly on my web. Well, when you assume the future maintenance costs, you do NOT make a provision, but you capitalize them in the cost of your asset when they occur. Then you depreciate them separately, over the period until the next maintenance. It's in IAS 16.
thank you very very very much
A company has purchased a plant for Rs. 5 million with an estimated useful life of 10 years. In order to provide funds for replacement of plant the company has decided to create provision with equal amounts for ten years. Therefore; the company debited “Plant replacement charges” and credited “Provision for Plant replacement” in current year’s financial statements.
Comment and explain, whether the above provision meets the requirements of IAS 37?
can you please answer me ?
Pls why must we convert it to future value (9:28) of the video
This is great.
Thank you
I just want to know where is provision and impairment. Both are recorded under which financial statement????
Outstanding
Thank you, you are a brain
YOU ARE THE BEST
that's great thank you so much.
Is loan commitment by banks & financial institution considered as contingent liability?
Bank loan isn't contingent liability, it's definite liability.
Letter of "guaranty" is contingent liability and should be disclosed.
I have no accounting background now I am doing acca so can you help me
Hey Silvia, could u plz explain IAS 11 inclusive of survey percentage & all..It will be so nice of u..
Excellent!!!!
Thanks Silvia..
oh my wonderfull
please help me identify a provision before recognition, please help me Identify a provision in terms of the definition
you look like pheobe from Friends
thank you so much
Thanks
Thanks a lot....👍👍👍👍👍👍👍
Great job.
Great job!
Hello , I need IFRS KIT can you please provide me , thank you
cool!!!
Hi,
I have an URGENT question, my exam is Tuesday.
I was doing some question practice, and came across one which created a provision for a court case (it was highly likely the company would have to pay the other party).
My question is, if a provision must be a present obligation, how can a court case be a provision. The same goes for when a company creates a provision for doubtful debts.
How can the outcome of a court case be a provision, if it has no outcome yet?
If it's that URGENT :) - the present obligation must have arisen based on some past event. Your past event here is not the court proceedings and their outcome themselves, but the act that lead to the court (you damaged something, caused something, harmed someone...). So there is a past event. Then you assess the probability of having to pay. If it is highly likely that you will have to pay based on expected result of your court, then you have a present obligation here, even if the court proceedings have not been finished yet. That's coming from the standard. As for doubtful debts - this is a completely different story. I don't like to call it "provision", because it is NOT a provision under IAS 37. Instead, it is an impairment of financial assets, you need to follow IFRS 9, not IAS 37 in this case, thus you are NOT assessing any present obligation, past event or so. You are assesing expected credit loss instead.
Lovely accent -> Slovakia, am I right?
Jasne ;)
Tiež som si to hneď myslel. Veľmi dobre nahovorené a zrozumiteľné. Ďakujem. 😀
do we consolidate contingent liability and do we eliminate it
Why on God's green earth you would consolidate CONTINGENT LIABILITY? It is just mentioned in the disclosure NOT AN ACTUAL LIABILITY BOOKED in the book.
tum beste
If only you would do business analysis too
Not in this summary, I'm sorry, that was not the purpose of it. :)
@@CPDbox please check my query
Wow
saze safa sibancane