IAS 37Chapter 1Lesson 1
Objective and scope of IAS 37
Step 1 of 8Learning objectives
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IAS 37 deals with three related matters: provisions (liabilities whose timing or amount is uncertain), contingent liabilities and contingent assets. Before applying its rules, you must check that the situation really falls within it: executory contracts that are not onerous, financial instruments within IFRS 9 and items dealt with by a more specific standard (income taxes, leases, employee benefits, insurance contracts, business combinations, revenue from contracts with customers) are excluded, with targeted returns to IAS 37 for certain contracts that have become onerous.
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Learning objectives
- Explain the objective of IAS 37: recognition criteria, measurement bases and sufficient information for provisions and contingencies.
- Identify the situations outside the scope: executory contracts that are not onerous, financial instruments within IFRS 9, items dealt with by another standard.
- Distinguish a provision under IAS 37 from an adjustment to the carrying amount of an asset (depreciation, impairment, doubtful debts).
- Determine when IAS 37 applies to a contract with a customer or to a lease that has become onerous.