Updated on: Jun 15th, 2024
|
2 min read
In this article, we will explain ICDS X and its difference with respective Notified AS.
ICDS X deals with provisions, contingent liabilities and contingent assets, except those resulting from financial instruments, executory contracts and others arising in the insurance business.
1. Provision shall be recognized when:
i. there is one present obligation as a result of a past event
ii. it is reasonably certain that the obligation will be settled
iii. a reliable estimate of amount of obligation can be made
2. No provisions for future operational cost will be recognized
3. Contingent assets are assessed continually and when it becomes reasonably certain that the inflow of economic benefit will arise, the asset and related income are recognized in the previous year in which the change occurs
Note: A provision shall be used only for expenditures for which the provision was originally made.
Disclosure shall be made in respect of:
Sl. No. | Basis | ICDS X | AS 29 |
1. | Recognition of provision | Provision shall be recognized when it is reasonably certain that an outflow of economic resources will not be required to settle the obligation | Provision shall be recognized when it is probable that an outflow of economic resources will not be required to settle the obligation |
2. | Recognition of contingent asset | Contingent Asset is recognised when it is reasonably certain that inflow of economic benefit will arise | Contingent Asset is recognised when inflow of economic benefit is virtually certain |
3. | Reversal of provision | If it is reasonably certain that an outflow of economic resources will not be required to settle the provision then such provision should be reversed | If it is probable that an outflow of economic resources will not be required to settle the provision then such provision should be reversed |
4. | Reversal of Contingent asset | If it is reasonably certain that an inflow of economic benefits will not arise then such asset and related income should be reversed | If it is probable that an inflow of economic benefits will not arise then such asset and related income should be reversed |
ICDS X deals with provisions, contingent liabilities, and contingent assets. Includes recognition, measurement, review, and disclosures. The comparison with AS 29 highlights differences in recognition, reversal, and contingent assets. Other related ICDS articles are also referenced.