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TMI BlogICDS X : Provisions, Contingent Liabilities & Contingent AssetsX X X X Extracts X X X X X X X X Extracts X X X X ..... from financial instruments, irrespective of whether the financial instruments are held as investments or as stock-in-trade.i It lso excludes provisions, contingent liabilities and contingent assets governed by other ICDSs, hence some other items excluded by this ICDS would be: Construction Contracts governed by ICDS III Foreign Currency Transactions governed by ICDS VI Securities transactions governed by ICDS VIII. This ICDS would not affect revenue recognition, which is governed by ICDS IV. This ICDS would however impact recognition of expenditure, in as much as the point of recognition of a provision or treatment of an item as a contingent liability, may impact the year of allowability of the corresponding expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made for costs that need to be incurred to operate in future. This is on account of the fact that financial statements deal with the financial position of the entity as at the end of the reporting period, and not its possible position in the future. Therefore, the only liabilities recognised are those that exist at the end of the reporting period. It is only those obligations arising from past events existing independently of a person's future actions, that is the future conduct of its business, that are recognised as provisions, for example penalties or cleanup costs for unlawful environmental damage, decommissioning costs of an oil installation or a nuclear power station. Note: Where a provision for warranties is base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecognised as a provision shall be the best estimate of the expenditure required to settle the present obligation at the end of the previous year. The amount of a provision shall not be discounted to its present value . The amount recognised as asset and related income shall be the best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value. 4. Reimbursements:- Under ICDSX, reimbursement would be required to be recognised once there is reasonable certainty. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when it is reasonably ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e. the financial year 2016-17, the entity would need to review all past events to see whether any provision is to be recognised or derecognised, and whether any asset is to be recognised or derecognised, in relation to such past events, in accordance with the provisions of this ICDS. 8. Disclosure:- The disclosures under this ICDS are fairly extensive, and need to be made for each class of provision and asset. They are however similar to the disclosures required under AS 29 and under Ind AS 37. The reference in relation to assets and related income should be considered only in relation to recognition of contingent assets as assets, and not to all assets, since the ICDS deals only with contingent assets. - Manuals - Ready re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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