{"entries":[{"key":"LX.IAS37.000001","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"OBJECTIVE_THREE_ELEMENTS","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A colleague says: \"IAS 37 only tells you when to put a provision in the balance sheet; what the notes must explain is a matter for other standards.\"","es":""},"explanation":{"fr":"","en":"False. The objective of IAS 37 has three parts: appropriate recognition criteria and measurement bases for provisions, contingent liabilities and contingent assets, and sufficient information in the notes to understand their nature, timing and amount (IAS 37, objective).","es":""},"common_error":{"fr":"","en":"Reducing IAS 37 to a recognition rule and forgetting measurement and disclosure.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000002","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE"],"dimension":"RECOGNITION","format":"MATCHING","context":"CONSTRUCTION","tested_point":"OBJECTIVE_THREE_ELEMENTS","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"The management accountant of Halbrenne, a fictitious civil engineering company, is preparing the year end and has three questions about a dispute with a project owner. Match each question to the part of the objective of IAS 37 that answers it.","es":""},"explanation":{"fr":"","en":"The objective of IAS 37 combines recognition criteria (is a liability needed?), measurement bases (for what amount?) and sufficient information in the notes on nature, timing and amount (IAS 37, objective). The deferred tax relating to the dispute falls under IAS 12, not under the objective of IAS 37.","es":""},"common_error":{"fr":"","en":"Linking the lawsuit's deferred tax to IAS 37's objective: it covers recognition, measurement and disclosure; tax belongs to IAS 12.","es":""},"format":"MATCHING","left":[{"id":"L1","text":{"fr":"","en":"Should a liability be recognised for the dispute?","es":""}},{"id":"L2","text":{"fr":"","en":"At what amount should the liability be shown in the balance sheet?","es":""}},{"id":"L3","text":{"fr":"","en":"What should the reader learn about the nature, timing and amount of the dispute?","es":""}}],"right":[{"id":"R1","text":{"fr":"","en":"Recognition criteria","es":""}},{"id":"R2","text":{"fr":"","en":"Measurement bases","es":""}},{"id":"R3","text":{"fr":"","en":"Information in the notes","es":""}},{"id":"R4","text":{"fr":"","en":"Deferred tax calculation","es":""}}],"pairs":[{"left":"L1","right":"R1"},{"left":"L2","right":"R2"},{"left":"L3","right":"R3"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000003","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"INDUSTRIAL","tested_point":"SCOPE_SORTING","difficulty":"BEGINNER","estimated_time_s":150,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"how"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Vellinor, a fictitious industrial group, lists the items labelled \"provisions\" or similar in its trial balance. Classify each item.","es":""},"explanation":{"fr":"","en":"IAS 37 deals with liabilities of uncertain timing or amount that are not covered by another standard: the dispute and the decommissioning belong there. Another standard applies when it deals with the type of item: income taxes (IAS 12), employee benefits (IAS 19), contingent consideration of an acquirer (IFRS 3) (IAS 37, para. 5); a financial guarantee within the scope of IFRS 9 is excluded (IAS 37, para. 2). \"Provisions\" for depreciation or for doubtful receivables are adjustments to the carrying amounts of assets, not dealt with by IAS 37 (IAS 37, para. 7).","es":""},"common_error":{"fr":"","en":"Believing that every item labelled \"provision\" falls under IAS 37.","es":""},"format":"CLASSIFICATION","categories":[{"id":"IAS37","text":{"fr":"","en":"Provision within IAS 37","es":""}},{"id":"OTHER","text":{"fr":"","en":"Liability dealt with by another standard","es":""}},{"id":"ASSET","text":{"fr":"","en":"Adjustment to the carrying amount of an asset","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Dispute with a former distributor claiming a termination indemnity","es":""},"category":"IAS37"},{"id":"I2","text":{"fr":"","en":"Obligation to dismantle a storage tank already built on leased land","es":""},"category":"IAS37"},{"id":"I3","text":{"fr":"","en":"Risk of a reassessment of income tax for the year","es":""},"category":"OTHER"},{"id":"I4","text":{"fr":"","en":"Defined benefit pension obligation to employees","es":""},"category":"OTHER"},{"id":"I5","text":{"fr":"","en":"Financial guarantee given to a bank, within the scope of IFRS 9","es":""},"category":"OTHER"},{"id":"I6","text":{"fr":"","en":"Contingent consideration payable to the sellers of an acquired company","es":""},"category":"OTHER"},{"id":"I7","text":{"fr":"","en":"\"Provision for doubtful receivables\" on customers in difficulty","es":""},"category":"ASSET"},{"id":"I8","text":{"fr":"","en":"\"Provision for depreciation\" of machinery","es":""},"category":"ASSET"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000004","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"FOOD","tested_point":"EXECUTORY_CONTRACT_SCOPE","difficulty":"BEGINNER","estimated_time_s":75,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"executory-contracts"},"references":["IAS 37","IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"On 20 December N, Tarvessa, a fictitious flour mill, orders 600 tonnes of wheat for delivery in March N+1 at a market price. At the year end, neither the supplier nor Tarvessa has started to perform the order, and the contract remains profitable. What treatment does IAS 37 call for?","es":""},"explanation":{"fr":"","en":"It is an executory contract: neither party has performed its obligations. IAS 37 applies to such contracts only if they are onerous (IAS 37, paras. 1 and 3). As the contract is profitable, it is outside the scope of the standard: no provision and no disclosure on that basis.","es":""},"common_error":{"fr":"","en":"Confusing the commitment to pay for a future purchase with a present obligation to be provided for.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"None: an executory contract that is not onerous, outside the scope of IAS 37","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A provision for the total price of the order","es":""},"correct":false,"feedback":{"fr":"","en":"Tarvessa has not received the wheat: it has no present obligation to pay; the mutual commitment of an executory contract is not a provision.","es":""}},{"id":"C","text":{"fr":"","en":"A contingent liability disclosed in the notes","es":""},"correct":false,"feedback":{"fr":"","en":"An executory contract that is not onerous is outside the scope of the standard; it is not a contingent liability.","es":""}},{"id":"D","text":{"fr":"","en":"A provision equal to the expected margin on reselling the flour","es":""},"correct":false,"feedback":{"fr":"","en":"An expected margin is never a liability; nothing in the situation creates an obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000005","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"ENERGY","tested_point":"EXECUTORY_CONTRACT_SCOPE","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"executory-contracts"},"references":["IAS 37","IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"An electricity producer has committed, under a firm contract not yet performed by either party, to buy gas at a fixed price for two years. The collapse of electricity prices now makes the contract onerous. The contract remains outside the scope of IAS 37 because it has not yet been performed.","es":""},"explanation":{"fr":"","en":"False. Executory contracts are excluded from the scope of IAS 37 unless they are onerous (IAS 37, paras. 1 and 3): an executory contract that has become onerous falls under the standard and calls for the onerous contract analysis.","es":""},"common_error":{"fr":"","en":"Applying the exclusion for executory contracts while forgetting its exception.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000006","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"ANALYSIS","format":"MINI_CASE","context":"SOFTWARE","tested_point":"ONEROUS_CUSTOMER_AND_LEASE_CONTRACTS","difficulty":"ADVANCED","estimated_time_s":540,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"other-standards"},"references":["IAS 37","IFRS 15 §B30"],"exercise":{"prompt":{"fr":"","en":"Analyse Quintoral's three situations and determine, for each one, whether IAS 37 applies.","es":""},"explanation":{"fr":"","en":"IAS 37 leaves to another standard the items that standard deals with, but takes over for contracts with customers that are or become onerous (IFRS 15 containing no requirement on this) and, for leases, for those that become onerous before their commencement date and for short-term or low-value asset leases accounted for under para. 6 of IFRS 16 (IAS 37, para. 5). A warranty that cannot be purchased separately and provides no additional service falls under IAS 37 (IFRS 15, para. B30).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Quintoral, a fictitious publisher of hospital management software, has a 31 December N year end. Three files are open.","es":""},"exhibits":[{"title":{"fr":"","en":"The three files (case data)","es":""},"body":{"fr":"","en":"1. A fixed-price integration contract signed with a clinic: the costs still to be incurred now exceed the price still to be received.\n2. An office lease signed in November N, with a commencement date of 1 March N+1: Quintoral has abandoned the planned expansion and the premises will remain empty.\n3. The 12-month conformity warranty granted on each licence, which cannot be purchased separately and only covers compliance with the specifications.","es":""}}],"parts":[{"prompt":{"fr":"","en":"File 1: which standard deals with the onerous nature of the contract with the clinic?","es":""},"explanation":{"fr":"","en":"IAS 37 applies to contracts with customers that are or become onerous, as IFRS 15 contains no requirement on this (IAS 37, para. 5).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IAS 37","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"IFRS 15, which alone deals with contracts with customers","es":""},"correct":false,"feedback":{"fr":"","en":"IFRS 15 contains nothing on onerous contracts: IAS 37 applies on that point.","es":""}},{"id":"C","text":{"fr":"","en":"None: a future loss on a customer contract is never recognised","es":""},"correct":false,"feedback":{"fr":"","en":"The unavoidable loss on an onerous contract is provided for under IAS 37; only future operating losses in general are excluded.","es":""}}],"id":"P1","dimension":"ANALYSIS"},{"prompt":{"fr":"","en":"File 2: as the lease is a lease contract, IAS 37 can never apply, even if it becomes onerous before its commencement date.","es":""},"explanation":{"fr":"","en":"False. IAS 37 remains applicable to a lease that becomes onerous before its commencement date (IAS 37, para. 5). Measuring any provision requires an analysis of the unavoidable costs, not asked here.","es":""},"common_error":{"fr":"","en":"Excluding every lease from IAS 37: a lease that becomes onerous before its commencement date remains within it.","es":""},"format":"TRUE_FALSE","answer":false,"id":"P2","dimension":"ANALYSIS"},{"prompt":{"fr":"","en":"File 3: how is the conformity warranty accounted for?","es":""},"explanation":{"fr":"","en":"A warranty that cannot be purchased separately and provides no service in addition to the assurance of conformity falls under IAS 37 (IFRS 15, para. B30): Quintoral provides for the expected costs if the recognition criteria are met.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Under IAS 37: a provision for the expected costs of bringing licences into conformity","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"As a separate performance obligation, deferring part of the price","es":""},"correct":false,"feedback":{"fr":"","en":"That treatment applies to a warranty that can be purchased separately or that provides an additional service, which is not the case here.","es":""}},{"id":"C","text":{"fr":"","en":"No accounting until a customer complains","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation arises from the sale under warranty; probability is assessed for all licences together, without waiting for a claim.","es":""}}],"id":"P3","dimension":"RECOGNITION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000007","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"RETAIL","tested_point":"WARRANTY_IAS37_OR_IFRS15","difficulty":"EXPERT","estimated_time_s":120,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"judgment"},"references":["IAS 37","IFRS 15 §B29","IFRS 15 §B30","IFRS 15"],"exercise":{"prompt":{"fr":"","en":"Brisaval, a fictitious household appliance retailer, sells washing machines with the two-year legal conformity warranty. At the time of purchase, the customer can also buy, for 79, a three-year extension including an annual maintenance visit. Which analysis is correct?","es":""},"explanation":{"fr":"","en":"A warranty the customer can purchase separately is a distinct service and therefore a performance obligation under IFRS 15 (IFRS 15, para. B29). The legal warranty, which cannot be purchased separately and assures conformity, falls under IAS 37 (IFRS 15, para. B30); its legal nature suggests it is not a performance obligation (IFRS 15, para. B31). IAS 37 leaves to IFRS 15 what relates to revenue from contracts with customers (IAS 37, para. 5).","es":""},"common_error":{"fr":"","en":"Treating all warranties the same way, without checking whether they can be purchased separately.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Legal warranty: provision under IAS 37; paid extension: performance obligation under IFRS 15","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Both warranties: provision under IAS 37","es":""},"correct":false,"feedback":{"fr":"","en":"The extension can be purchased separately: it is a service sold, to be accounted for under IFRS 15, not a provision.","es":""}},{"id":"C","text":{"fr":"","en":"Both warranties: performance obligations under IFRS 15","es":""},"correct":false,"feedback":{"fr":"","en":"The legal conformity warranty cannot be purchased separately and provides no additional service: it falls under IAS 37.","es":""}},{"id":"D","text":{"fr":"","en":"Legal warranty: no accounting, because it is required by law","es":""},"correct":false,"feedback":{"fr":"","en":"An obligation imposed by law is precisely a legal obligation: the expected costs are provided for if the criteria are met.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000008","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"DISTRIBUTION","tested_point":"PROVISION_WORD_ASSET_ADJUSTMENTS","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"provision-word"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"The intern at Pellaro, a fictitious wholesaler, has drafted the \"Provisions\" note below. Spot the incorrect statements.","es":""},"explanation":{"fr":"","en":"IAS 37 deals with liabilities of uncertain timing or amount; write-downs of inventories and receivables are adjustments to the carrying amounts of assets, not dealt with by the standard even if they are sometimes called \"provisions\" (IAS 37, para. 7). The dispute falls under IAS 37; the uncertainty over income tax falls under IAS 12 (IAS 37, para. 5).","es":""},"common_error":{"fr":"","en":"Letting local vocabulary (\"provision\") decide the IFRS treatment.","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"The \"provision for inventory write-down\" of 42,000 is presented among the provisions in liabilities under IAS 37.","es":""},"erroneous":true,"correction":{"fr":"","en":"It is an adjustment to the carrying amount of inventories, presented as a reduction of the asset; it is not within IAS 37.","es":""}},{"id":"S2","text":{"fr":"","en":"The dispute with a carrier, of uncertain amount, is a provision within IAS 37.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"The \"provision for doubtful receivables\" of 18,500 is a liability of uncertain timing within IAS 37.","es":""},"erroneous":true,"correction":{"fr":"","en":"It is an adjustment to the carrying amount of receivables (an asset), outside IAS 37.","es":""}},{"id":"S4","text":{"fr":"","en":"The risk of an income tax reassessment is dealt with under IAS 12, not IAS 37.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000009","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RECOGNITION","format":"TRUE_FALSE","context":"GENERIC","tested_point":"PROVISION_WORD_ASSET_ADJUSTMENTS","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000001","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"provision-word"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"In the local chart of accounts of a subsidiary, the accumulated depreciation of trucks is called \"provision for depreciation\". Under IFRS, this amount is a provision within IAS 37.","es":""},"explanation":{"fr":"","en":"False. IAS 37 defines provisions as liabilities of uncertain timing or amount; depreciation is an adjustment to the carrying amount of an asset, not dealt with by the standard, whatever its local name (IAS 37, para. 7).","es":""},"common_error":{"fr":"","en":"Relying on the local label “provision for depreciation”: under IFRS it adjusts an asset's carrying amount; it is not a liability.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000010","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","format":"MATCHING","context":"GENERIC","tested_point":"KEY_TERMS_MATCHING","difficulty":"BEGINNER","estimated_time_s":120,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Match each IAS 37 term to its description (teaching wording).","es":""},"explanation":{"fr":"","en":"The IAS 37 definitions: provision = liability of uncertain timing or amount; obligating event = event that creates a legal or constructive obligation leaving no realistic alternative to settling it; constructive obligation = arising from the entity's actions (past practice, published policies, sufficiently specific recent statement) that have created a valid expectation in others; contingent liability = possible obligation depending on uncertain future events not wholly within the entity's control, or a present obligation not recognised; contingent asset = possible asset depending on such events (IAS 37, para. 10). A debt whose amount and timing are known is not a provision.","es":""},"common_error":{"fr":"","en":"Calling a liability with known amount and timing a provision: a provision implies uncertainty about one or the other.","es":""},"format":"MATCHING","left":[{"id":"L1","text":{"fr":"","en":"Provision","es":""}},{"id":"L2","text":{"fr":"","en":"Obligating event","es":""}},{"id":"L3","text":{"fr":"","en":"Constructive obligation","es":""}},{"id":"L4","text":{"fr":"","en":"Contingent liability","es":""}},{"id":"L5","text":{"fr":"","en":"Contingent asset","es":""}}],"right":[{"id":"R1","text":{"fr":"","en":"Liability of uncertain timing or amount","es":""}},{"id":"R2","text":{"fr":"","en":"Event that leaves no realistic alternative to settling the obligation","es":""}},{"id":"R3","text":{"fr":"","en":"Obligation arising from the entity's actions, which have created a valid expectation in others","es":""}},{"id":"R4","text":{"fr":"","en":"Possible obligation whose existence depends on uncertain future events not wholly within the entity's control","es":""}},{"id":"R5","text":{"fr":"","en":"Possible asset whose existence depends on uncertain future events","es":""}},{"id":"R6","text":{"fr":"","en":"Debt whose amount and due date are set by an invoice","es":""}}],"pairs":[{"left":"L1","right":"R1"},{"left":"L2","right":"R2"},{"left":"L3","right":"R3"},{"left":"L4","right":"R4"},{"left":"L5","right":"R5"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000011","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"APPLICATION","format":"CLASSIFICATION","context":"RETAIL","tested_point":"PROVISION_VS_ACCRUAL","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"provisions-vs-other-liabilities"},"references":["IAS 37 §11","IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Corvaline, a fictitious chain of sports shops, analyses its liabilities at 31 December N. Classify each item.","es":""},"explanation":{"fr":"","en":"Trade payables relate to goods or services received and invoiced or formally agreed; accruals to goods or services received but not paid, invoiced or formally agreed, with generally much less uncertainty than a provision (IAS 37, para. 11). A provision is a liability of uncertain timing or amount (IAS 37, para. 10): the dispute and the expected warranty costs.","es":""},"common_error":{"fr":"","en":"Calling every expense not yet invoiced a \"provision\".","es":""},"format":"CLASSIFICATION","categories":[{"id":"PAYABLE","text":{"fr":"","en":"Trade payables","es":""}},{"id":"ACCRUAL","text":{"fr":"","en":"Accrued expenses","es":""}},{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Invoice received on 28 December for a delivered batch of rackets, 18,600","es":""},"category":"PAYABLE"},{"id":"I2","text":{"fr":"","en":"Cleaning of the shops in December, not yet invoiced, amount known from the time sheets, 2,400","es":""},"category":"ACCRUAL"},{"id":"I3","text":{"fr":"","en":"Claim by a customer injured by a bicycle, amount and outcome uncertain, an award against the entity probable","es":""},"category":"PROVISION"},{"id":"I4","text":{"fr":"","en":"December rent invoiced by the landlord and not yet paid","es":""},"category":"PAYABLE"},{"id":"I5","text":{"fr":"","en":"Expected costs of warranty repairs on treadmills sold in N","es":""},"category":"PROVISION"},{"id":"I6","text":{"fr":"","en":"Electricity used in December, read from the meter, invoice expected in January","es":""},"category":"ACCRUAL"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000012","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"HOSPITALITY","tested_point":"PROVISION_VS_ACCRUAL","difficulty":"BEGINNER","estimated_time_s":60,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"provisions-vs-other-liabilities"},"references":["IAS 37 §11"],"exercise":{"prompt":{"fr":"","en":"A hotel has not yet received the invoice for December laundry; it estimates the amount from the quantities of linen sent, without any particular difficulty. Why is this amount not a provision?","es":""},"explanation":{"fr":"","en":"What distinguishes a provision from other liabilities is the uncertainty about the timing or amount of the future expenditure; for an accrual, an estimate is sometimes needed, but the uncertainty is generally much less (IAS 37, para. 11).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Because the uncertainty about the amount and timing is low","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Because no invoice has been received","es":""},"correct":false,"feedback":{"fr":"","en":"The absence of an invoice does not make it a provision: an accrual is precisely not invoiced; the criterion is the degree of uncertainty.","es":""}},{"id":"C","text":{"fr":"","en":"Because the amount is below materiality","es":""},"correct":false,"feedback":{"fr":"","en":"The classification does not depend on the amount but on the uncertainty about timing or amount.","es":""}},{"id":"D","text":{"fr":"","en":"Because a provision always involves a dispute","es":""},"correct":false,"feedback":{"fr":"","en":"Warranties, restoration or onerous contracts are also provisions, without any dispute.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000013","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"ENERGY","tested_point":"CONSTRUCTIVE_VS_INTENTION","difficulty":"BEGINNER","estimated_time_s":60,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"obligating-event"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"In December N, the board of Duranthe, a fictitious fuel storage company, records in internal minutes that are not circulated its \"intention\" to clean a neighbouring ditch at its own expense, without being required to do so by law. This record creates a constructive obligation at 31 December N.","es":""},"explanation":{"fr":"","en":"False. A constructive obligation arises from the entity's actions — past practice, published policies or a sufficiently specific recent statement — that have created a valid expectation in others that it will discharge its responsibilities (IAS 37, para. 10). An internal intention, unknown to others, creates no expectation.","es":""},"common_error":{"fr":"","en":"Confusing management's intention with a constructive obligation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000014","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RECOGNITION","format":"MULTIPLE_CHOICE","context":"RETAIL","tested_point":"CONSTRUCTIVE_VS_INTENTION","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"obligating-event"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"In the absence of a legal obligation, which of the following situations can create a constructive obligation?","es":""},"explanation":{"fr":"","en":"A constructive obligation results from the entity's actions where, by past practice, published policies or a sufficiently specific recent statement, it has indicated that it will accept certain responsibilities and has thus created a valid expectation in others (IAS 37, para. 10). An internal budget or an email between managers creates no expectation in others.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"For ten years a retailer has refunded, without question, any item returned within 60 days, which its customers know","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A published environmental policy commits the entity to rehabilitating any land it contaminates","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The chairman publicly announces, with figures and a timetable, compensation for residents disturbed by a construction site","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The internal budget for N+1 provides for an advertising campaign","es":""},"correct":false,"feedback":{"fr":"","en":"An internal budget is known to no third party and concerns an avoidable future expense: no valid expectation.","es":""}},{"id":"E","text":{"fr":"","en":"An email between two directors mentions the idea of compensating a supplier","es":""},"correct":false,"feedback":{"fr":"","en":"An idea exchanged internally is neither a practice, nor a published policy, nor a statement to others.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000015","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"GENERIC","tested_point":"PROVISION_VS_CONTINGENT_LIABILITY","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"contingencies-terms"},"references":["IAS 37 §10","IAS 37 §13"],"exercise":{"prompt":{"fr":"","en":"Classify each situation (all at 31 December N, case data) as a provision, a contingent liability or neither.","es":""},"explanation":{"fr":"","en":"A provision is a present obligation with a probable outflow, provided a reliable estimate can be made; a contingent liability is either a possible obligation whose existence depends on uncertain future events not wholly within the entity's control, or a present obligation not recognised because an outflow is not probable or no reliable estimate can be made (IAS 37, paras. 10 and 13). Costs of future operations are neither.","es":""},"common_error":{"fr":"","en":"Believing that a contingent liability is a small provision.","es":""},"format":"CLASSIFICATION","categories":[{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}},{"id":"CONTINGENT","text":{"fr":"","en":"Contingent liability","es":""}},{"id":"NEITHER","text":{"fr":"","en":"Neither","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Present obligation, probable outflow, amount can be reliably estimated","es":""},"category":"PROVISION"},{"id":"I2","text":{"fr":"","en":"Possible obligation that will only exist if a foreign court accepts a new interpretation, outside the entity's control","es":""},"category":"CONTINGENT"},{"id":"I3","text":{"fr":"","en":"Present obligation whose settlement will probably not require an outflow (outflow possible but not remote)","es":""},"category":"CONTINGENT"},{"id":"I4","text":{"fr":"","en":"Present obligation, probable outflow, but the extremely rare case where no reliable estimate is possible","es":""},"category":"CONTINGENT"},{"id":"I5","text":{"fr":"","en":"Training costs planned for software to be installed next year","es":""},"category":"NEITHER"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000016","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"APPLICATION","format":"FILL_BLANK","context":"LOGISTICS","tested_point":"PROVISION_VS_CONTINGENT_LIABILITY","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"how"},"references":["IAS 37 §10","IAS 37 §11","IAS 37 §13"],"exercise":{"prompt":{"fr":"","en":"Complete the analysis of the three items of Selvigne, a fictitious carrier, at 31 December N.","es":""},"explanation":{"fr":"","en":"The December tolls are a service received, not yet invoiced, with a known amount: an accrual (IAS 37, para. 11). The dispute creates a present obligation with a probable outflow and an uncertain amount: a provision (IAS 37, para. 10). The claim whose very existence depends on a future decision outside Selvigne's control is a possible obligation: a contingent liability, not recognised (IAS 37, para. 13).","es":""},"common_error":{"fr":"","en":"Providing for the tolls of known amount, or recognising the conditional claim: the former is an accrual, the latter a contingent liability.","es":""},"format":"FILL_BLANK","text":{"fr":"","en":"December tolls (3,150, known amount, invoice in January): {{a}}. Dispute with a customer whose goods were damaged, which will most likely be lost for an amount to be estimated: {{b}}. Claim by a resident, which will only exist if the municipality classifies the street as a protected area: {{c}}.","es":""},"blanks":[{"id":"a","mode":"CHOICE","choices":[{"id":"ACCRUAL","text":{"fr":"","en":"accrual","es":""}},{"id":"PROVISION","text":{"fr":"","en":"provision","es":""}},{"id":"CONTINGENT","text":{"fr":"","en":"contingent liability","es":""}}],"answer":"ACCRUAL"},{"id":"b","mode":"CHOICE","choices":[{"id":"ACCRUAL","text":{"fr":"","en":"accrual","es":""}},{"id":"PROVISION","text":{"fr":"","en":"provision","es":""}},{"id":"CONTINGENT","text":{"fr":"","en":"contingent liability","es":""}}],"answer":"PROVISION"},{"id":"c","mode":"CHOICE","choices":[{"id":"ACCRUAL","text":{"fr":"","en":"accrual","es":""}},{"id":"PROVISION","text":{"fr":"","en":"provision","es":""}},{"id":"CONTINGENT","text":{"fr":"","en":"contingent liability","es":""}}],"answer":"CONTINGENT"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000017","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"GENERIC","tested_point":"KEY_TERMS_MISCONCEPTIONS","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"contingencies-terms"},"references":["IAS 37 §10","IAS 37","IAS 37 §13"],"exercise":{"prompt":{"fr":"","en":"A revision sheet prepared by a student contains the following statements. Spot the incorrect ones.","es":""},"explanation":{"fr":"","en":"A contingent liability is never recognised (IAS 37, para. 13); an obligating event leaves no realistic alternative to settling the obligation, and a legal obligation can arise from a contract (IAS 37, para. 10); in a general sense all provisions are contingent, but \"contingent\" is reserved for items not recognised (IAS 37, para. 12). A contingent asset is a possible asset, not recognised (IAS 37, para. 10).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"A contingent liability is recognised at its most likely amount.","es":""},"erroneous":true,"correction":{"fr":"","en":"A contingent liability is not recognised; it is disclosed in the notes unless the outflow is remote.","es":""}},{"id":"S2","text":{"fr":"","en":"A legal obligation can arise from a contract.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"An obligating event leaves the entity free to settle the obligation or not.","es":""},"erroneous":true,"correction":{"fr":"","en":"On the contrary: it leaves it no realistic alternative to settling it.","es":""}},{"id":"S4","text":{"fr":"","en":"All provisions are, in a sense, contingent, but the term \"contingent\" is reserved for items not recognised.","es":""},"erroneous":false},{"id":"S5","text":{"fr":"","en":"A contingent asset is recognised in the balance sheet as soon as its existence is possible.","es":""},"erroneous":true,"correction":{"fr":"","en":"A contingent asset is not recognised; an asset is recognised only when the inflow is virtually certain, the asset then no longer being contingent.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000018","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"CONSTRUCTION","tested_point":"SETTLED_CLAIM_CLASSIFICATION","difficulty":"ADVANCED","estimated_time_s":120,"lesson_id":"LS.IAS37.000002","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"judgment"},"references":["IAS 37 §10","IAS 37 §11","IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"Arvenis, a fictitious building company, had carried since N−1 a provision of 64,000 for a dispute with a customer. On 22 December N, the parties signed a final settlement: Arvenis will pay 58,000 on 15 January N+1. How should the amount be presented at 31 December N?","es":""},"explanation":{"fr":"","en":"A provision is characterised by uncertainty about timing or amount (IAS 37, para. 10), which distinguishes it from other liabilities (IAS 37, para. 11). Once the settlement is signed, the amount and date are fixed: presenting 58,000 as another liability (a payable to the customer) is the most consistent reading, as a matter of professional judgement; the 6,000 no longer needed is reversed (IAS 37, para. 59).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Payable to the customer of 58,000; reversal of 6,000","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provision kept at 64,000 until payment","es":""},"correct":false,"feedback":{"fr":"","en":"The amount due is now known: keeping 64,000 would overstate the liability by 6,000.","es":""}},{"id":"C","text":{"fr":"","en":"Contingent liability of 58,000, disclosed in a note","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation is present and certain: it must be in liabilities, not only in a note.","es":""}},{"id":"D","text":{"fr":"","en":"No liability: payment will take place in N+1","es":""},"correct":false,"feedback":{"fr":"","en":"The payment date does not remove the obligation existing at the year end.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000019","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"THREE_CONDITIONS","difficulty":"BEGINNER","estimated_time_s":75,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14"],"exercise":{"prompt":{"fr":"","en":"Which conditions must be met to recognise a provision?","es":""},"explanation":{"fr":"","en":"A provision is recognised if, and only if, three cumulative conditions are met: a present obligation, legal or constructive, as a result of a past event; a probable outflow of resources embodying economic benefits; a reliable estimate of the amount (IAS 37, para. 14). Neither an invoice, nor a certain amount, nor an internal decision is one of the conditions.","es":""},"common_error":{"fr":"","en":"Requiring a certain amount: if the amount were certain, it would no longer be a provision.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A present obligation (legal or constructive) as a result of a past event","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A probable outflow of resources to settle the obligation","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A reliable estimate of the amount","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"An amount known with certainty","es":""},"correct":false,"feedback":{"fr":"","en":"A provision is precisely defined by uncertainty about amount or timing; a reliable estimate is enough.","es":""}},{"id":"E","text":{"fr":"","en":"A board decision to set up the provision","es":""},"correct":false,"feedback":{"fr":"","en":"Recognition follows from the facts; an internal decision is neither necessary nor sufficient.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000020","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","format":"ORDERING","context":"GENERIC","tested_point":"THREE_CONDITIONS","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"how"},"references":["IAS 37 §14","IAS 37 §23","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Put the steps for analysing a situation at the year end in order.","es":""},"explanation":{"fr":"","en":"Start from the past event, check the present obligation, then the probability of an outflow, then whether a reliable estimate is possible (IAS 37, paras. 14 and 23); only then measure at the best estimate (IAS 37, para. 36) before recording. If a condition is missing, the analysis moves to a contingent liability or to no accounting.","es":""},"common_error":{"fr":"","en":"Measuring the provision before establishing the present obligation and the probability of outflow: measurement comes after recognition.","es":""},"format":"ORDERING","steps":[{"id":"S1","text":{"fr":"","en":"Identify the past event at the origin of the situation","es":""}},{"id":"S2","text":{"fr":"","en":"Determine whether there is a present obligation, legal or constructive","es":""}},{"id":"S3","text":{"fr":"","en":"Assess whether an outflow of resources is more likely than not","es":""}},{"id":"S4","text":{"fr":"","en":"Check that a reliable estimate can be made","es":""}},{"id":"S5","text":{"fr":"","en":"Measure the provision at the best estimate","es":""}},{"id":"S6","text":{"fr":"","en":"Record the entry and prepare the disclosures","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000021","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"AUTOMOTIVE","tested_point":"CLASS_OF_SIMILAR_OBLIGATIONS","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"similar-obligations"},"references":["IAS 37 §24","IAS 37 §23"],"exercise":{"prompt":{"fr":"","en":"Faldoria, a fictitious e-scooter manufacturer, sold 12,000 scooters with a two-year warranty in N. For each scooter, the probability of a warranty repair is about 2%. What should be concluded about the probability of an outflow of resources?","es":""},"explanation":{"fr":"","en":"For a number of similar obligations, the probability of an outflow is assessed for the class as a whole: even if small for each item, it can be probable for the whole (IAS 37, para. 24). With about 240 expected repairs, an outflow is more likely than not (IAS 37, para. 23).","es":""},"common_error":{"fr":"","en":"Assessing probability scooter by scooter.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"An outflow is probable for the warranties as a whole: a provision must be recognised","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"As 2% is below 50%, no outflow is probable: no provision","es":""},"correct":false,"feedback":{"fr":"","en":"The threshold applies to the whole class, not to each scooter taken in isolation.","es":""}},{"id":"C","text":{"fr":"","en":"A contingent liability, to be disclosed in the notes","es":""},"correct":false,"feedback":{"fr":"","en":"The outflow is probable for the whole: the recognition criteria are met; it is not a contingent liability.","es":""}},{"id":"D","text":{"fr":"","en":"A provision only for the scooters already returned at 31 December","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation covers all scooters sold under warranty, including repairs still to come.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000022","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"RETAIL","tested_point":"CLASS_OF_SIMILAR_OBLIGATIONS","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"similar-obligations"},"references":["IAS 37 §24"],"exercise":{"prompt":{"fr":"","en":"Each hedge trimmer sold by a garden retailer has only a 3% risk of coming back under warranty: the outflow of resources is therefore not probable and no provision is recognised for the 40,000 hedge trimmers sold.","es":""},"explanation":{"fr":"","en":"False. Probability is assessed for the class of similar obligations as a whole: across 40,000 units, repairs are probable (IAS 37, para. 24).","es":""},"common_error":{"fr":"","en":"Assessing probability appliance by appliance: for similar obligations, it is assessed for the class as a whole.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000023","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"HOME_APPLIANCES","tested_point":"RECORD_PROVISION","difficulty":"BEGINNER","estimated_time_s":120,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"entry"},"references":["IAS 37 §14","IAS 37 §24"],"exercise":{"prompt":{"fr":"","en":"Grenvald, a fictitious kitchen robot manufacturer, sold 15,000 robots with a one-year warranty in N. Case data: 4% of claims expected, average repair cost 85. The three conditions are met. Record the entry at 31 December N.","es":""},"explanation":{"fr":"","en":"Provision: 15,000 × 4% × 85 = 51,000, recognised as an expense (IAS 37, para. 14), probability being assessed across all the robots (IAS 37, para. 24). No cash leaves yet: future repairs will be charged against the provision.","es":""},"common_error":{"fr":"","en":"Crediting cash or reducing revenue instead of recognising a provision.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"WARRANTY_PROVISION","text":{"fr":"","en":"Warranty provision","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}},{"id":"REVENUE","text":{"fr":"","en":"Revenue","es":""}},{"id":"TRADE_PAYABLES","text":{"fr":"","en":"Trade payables","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":51000},{"id":"L2","account":"WARRANTY_PROVISION","side":"CREDIT","amount":51000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000024","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"CONSTRUCTION","tested_point":"RECORD_PROVISION","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"entry"},"references":["IAS 37 §14"],"exercise":{"prompt":{"fr":"","en":"A building subcontractor is sued by a neighbour of a site for cracks caused in N. Its lawyer considers an award more likely than not and the best estimate to be 70,000. Record the entry at 31 December N.","es":""},"explanation":{"fr":"","en":"Present obligation (damage caused in N), probable outflow, reliable estimate: a provision of 70,000 recognised as an expense (IAS 37, para. 14).","es":""},"common_error":{"fr":"","en":"Waiting for the judgement to recognise: a present obligation, probable outflow and reliable estimate are enough to provide in year N.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"LITIGATION_PROVISION","text":{"fr":"","en":"Provision for litigation","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}},{"id":"CONTINGENT_LIABILITY","text":{"fr":"","en":"Contingent liability","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":70000},{"id":"L2","account":"LITIGATION_PROVISION","side":"CREDIT","amount":70000,"given":["side"]}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000025","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"PHARMA","tested_point":"RELIABLE_ESTIMATE_RARELY_IMPOSSIBLE","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"reliable-estimate"},"references":["IAS 37 §25","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Ombrelis, a fictitious laboratory, will very probably lose a dispute with a distributor (present obligation and probable outflow). Its lawyers put the compensation between 200,000 and 600,000. The CFO proposes recognising nothing \"for lack of a reliable amount\". What should the answer be?","es":""},"explanation":{"fr":"","en":"Using estimates is inherent in provisions: except in extremely rare cases, the entity can determine a range of possible outcomes and therefore a sufficiently reliable estimate (IAS 37, para. 25). Inability to estimate, which would lead to a contingent liability, is exceptional (IAS 37, para. 26). Here a range exists: a provision is recognised at the best estimate.","es":""},"common_error":{"fr":"","en":"Confusing uncertainty about the amount with inability to estimate.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A range of outcomes exists: a provision is recognised at the best estimate","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"He is right: the gap between the bounds makes any estimate unreliable","es":""},"correct":false,"feedback":{"fr":"","en":"A wide range does not prevent a reliable estimate; inability to estimate is reserved for extremely rare cases.","es":""}},{"id":"C","text":{"fr":"","en":"600,000, the upper bound, must be provided for out of prudence","es":""},"correct":false,"feedback":{"fr":"","en":"The provision is measured at the best estimate, not at the worst-case scenario.","es":""}},{"id":"D","text":{"fr":"","en":"A contingent liability must be disclosed without recognising anything","es":""},"correct":false,"feedback":{"fr":"","en":"This treatment only applies in the extremely rare case where no reliable estimate is possible, which is not the case.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000026","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"MEDIA","tested_point":"RELIABLE_ESTIMATE_RARELY_IMPOSSIBLE","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"reliable-estimate"},"references":["IAS 37 §24","IAS 37 §25","IAS 37"],"exercise":{"prompt":{"fr":"","en":"The CFO of Ludrane, a fictitious press group, has written the closing memo below. Spot the incorrect statements.","es":""},"explanation":{"fr":"","en":"A reliable estimate is almost always possible from a range of outcomes (IAS 37, para. 25); in the extremely rare case where it is not, the liability is disclosed as a contingent liability, with no token amount in the balance sheet (IAS 37, para. 26). The probability of an outflow is assessed for a class of similar obligations as a whole (IAS 37, para. 24).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"We do not provide for the defamation suit: our lawyers give a range of 80,000 to 150,000, so the amount is too uncertain.","es":""},"erroneous":true,"correction":{"fr":"","en":"A range allows a sufficiently reliable estimate: if the present obligation and the outflow are probable, a provision is required.","es":""}},{"id":"S2","text":{"fr":"","en":"For the unprecedented dispute for which no range can be established (extremely rare case), we disclose a contingent liability.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"For that same dispute, we record a token provision of 1 euro to flag it in the balance sheet.","es":""},"erroneous":true,"correction":{"fr":"","en":"Without a reliable estimate, nothing is recognised; only contingent liability disclosure is provided.","es":""}},{"id":"S4","text":{"fr":"","en":"For subscriptions refundable in case of non-delivery, we assess the probability of an outflow across all subscribers.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000027","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","format":"MINI_CASE","context":"FOOD","tested_point":"RECOGNITION_GRID_MINI_CASE","difficulty":"ADVANCED","estimated_time_s":600,"lesson_id":"LS.IAS37.000003","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"example"},"references":["IAS 37 §14","IAS 37 §23","IAS 37 §16","IAS 37 §18"],"exercise":{"prompt":{"fr":"","en":"Apply the three-condition grid to Estoval's three files at 31 December N.","es":""},"explanation":{"fr":"","en":"Each file goes through the three conditions (IAS 37, para. 14): the contamination creates a present obligation with a probable outflow; for the supplier's claim, the absence of a present obligation is more likely, hence a contingent liability disclosed unless the outflow is remote (IAS 37, paras. 16 and 23); the label change creates no present obligation (IAS 37, para. 18).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Estoval, a fictitious cannery, is preparing its year end at 31 December N. Three files are reviewed with its lawyer.","es":""},"exhibits":[{"title":{"fr":"","en":"Files at 31 December N (case data)","es":""},"body":{"fr":"","en":"1. A batch of contaminated tins, delivered in November N, made a restaurateur's customers ill; the restaurateur claims 52,000. The lawyer considers Estoval's liability more likely than not and estimates the most likely settlement at 38,000, the other outcomes being close.\n2. A former supplier claims 120,000 for wrongful termination; according to the lawyer, it is more likely than not that the court will dismiss the claim, but an award is not remote.\n3. The marketing director plans to replace all labels with a new visual identity in N+1, for 65,000.","es":""}}],"parts":[{"prompt":{"fr":"","en":"File 1: what treatment?","es":""},"explanation":{"fr":"","en":"Delivery of the contaminated batch (past event), liability more likely than not, amount can be estimated: provision of 38,000 (IAS 37, para. 14).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provision of 38,000","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provision of 52,000, the amount claimed","es":""},"correct":false,"feedback":{"fr":"","en":"The amount claimed is not the best estimate; the lawyer estimates the most likely settlement at 38,000, the other outcomes being close.","es":""}},{"id":"C","text":{"fr":"","en":"Contingent liability disclosed","es":""},"correct":false,"feedback":{"fr":"","en":"The three conditions are met: a provision is recognised.","es":""}}],"id":"P1","dimension":"RECOGNITION"},{"prompt":{"fr":"","en":"File 2: what treatment?","es":""},"explanation":{"fr":"","en":"As the absence of a present obligation is more likely, no provision: a contingent liability is disclosed, the outflow not being remote (IAS 37, para. 16).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Contingent liability disclosed in the notes","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provision of 120,000","es":""},"correct":false,"feedback":{"fr":"","en":"The present obligation is not more likely than not: no provision.","es":""}},{"id":"C","text":{"fr":"","en":"No disclosure","es":""},"correct":false,"feedback":{"fr":"","en":"Only a remote outflow removes the need for disclosure; here it is not remote.","es":""}}],"id":"P2","dimension":"RECOGNITION"},{"prompt":{"fr":"","en":"File 3: a provision of 65,000 must be recognised for the label change planned in N+1.","es":""},"explanation":{"fr":"","en":"False. No provision is recognised for costs to be incurred to operate in the future (IAS 37, para. 18): Estoval can abandon or postpone this change.","es":""},"common_error":{"fr":"","en":"Providing for a future operating cost: the entity can give up the label change; there is no present obligation.","es":""},"format":"TRUE_FALSE","answer":false,"id":"P3","dimension":"RULE_KNOWLEDGE"},{"prompt":{"fr":"","en":"Record the entry for file 1.","es":""},"explanation":{"fr":"","en":"Debit Provision expense 38,000; credit Provision for litigation 38,000 (IAS 37, para. 14).","es":""},"common_error":{"fr":"","en":"Crediting a trade payable or debiting the lawsuit to equity: the provision is credited against an expense.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"LITIGATION_PROVISION","text":{"fr":"","en":"Provision for litigation","es":""}},{"id":"CONTINGENT_LIABILITY","text":{"fr":"","en":"Contingent liability","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":38000},{"id":"L2","account":"LITIGATION_PROVISION","side":"CREDIT","amount":38000}],"id":"P4","dimension":"JOURNAL_ENTRY"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000028","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"HEALTHCARE","tested_point":"MORE_LIKELY_THAN_NOT_WITH_EVIDENCE","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §15","IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Hestival, a fictitious clinic, is being sued by a patient for an infection contracted in October N; at that date, its liability is uncertain. On 10 February N+1, before the financial statements are authorised, a court expert's report establishes that the infection came from a sterilisation failure at the clinic. How should the file be dealt with in the N financial statements?","es":""},"explanation":{"fr":"","en":"When it is unclear whether a present obligation exists, the entity assesses it using all available evidence, including the opinion of experts and the evidence provided by events after the reporting period; if the obligation is more likely than not at the year end, a provision is recognised (IAS 37, paras. 15 and 16). The report sheds light on the situation that already existed at 31 December N.","es":""},"common_error":{"fr":"","en":"Ignoring information after the year end that sheds light on a situation existing at the year end.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision in the N financial statements, the report confirming an obligation existing at 31 December","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A provision only in N+1, the date of the report","es":""},"correct":false,"feedback":{"fr":"","en":"The report is not the obligating event: the infection in N is; it provides evidence about the situation at the year end.","es":""}},{"id":"C","text":{"fr":"","en":"A contingent liability, as liability was uncertain at 31 December","es":""},"correct":false,"feedback":{"fr":"","en":"The assessment takes into account all available evidence, including evidence after the year end: the obligation is more likely than not.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000029","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"MORE_LIKELY_THAN_NOT_WITH_EVIDENCE","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"In a dispute, when it is more likely than not that the entity has no present obligation, it has nothing to recognise or disclose.","es":""},"explanation":{"fr":"","en":"False. Nothing is recognised, but the entity discloses a contingent liability, unless the possibility of an outflow is remote (IAS 37, para. 16).","es":""},"common_error":{"fr":"","en":"Forgetting the disclosure step.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000030","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"INDUSTRIAL","tested_point":"INDEPENDENT_OF_FUTURE_ACTIONS","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"no-future-operations"},"references":["IAS 37 §18","IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"Cardolys, a fictitious aluminium foundry, lists its expected expenditure at 31 December N. Classify each item according to whether or not it corresponds to an obligation existing independently of its future actions.","es":""},"explanation":{"fr":"","en":"Only obligations arising from past events and existing independently of the entity's future actions are provided for: a fine or the clean-up of unlawful damage already caused, decommissioning to the extent of damage already caused (IAS 37, para. 19). Expenditure the entity can avoid by its future conduct — upgrades to keep operating, training, maintenance — is not provided for (IAS 37, paras. 18 and 19).","es":""},"common_error":{"fr":"","en":"Providing for an expense because it is unavoidable \"if we want to carry on\".","es":""},"format":"CLASSIFICATION","categories":[{"id":"OBLIGATION","text":{"fr":"","en":"Present obligation: provision","es":""}},{"id":"FUTURE","text":{"fr":"","en":"Expenditure for future operations: no provision","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Fine imposed for an unauthorised fume discharge in September N","es":""},"category":"OBLIGATION"},{"id":"I2","text":{"fr":"","en":"Clean-up required by law of soil contaminated by a leak in N","es":""},"category":"OBLIGATION"},{"id":"I3","text":{"fr":"","en":"Removal, required by the permit, of the furnace already built, to the extent of damage already caused to the site","es":""},"category":"OBLIGATION"},{"id":"I4","text":{"fr":"","en":"Dust extractors to be installed by N+2 to keep operating the foundry","es":""},"category":"FUTURE"},{"id":"I5","text":{"fr":"","en":"Training of operators in a new casting process","es":""},"category":"FUTURE"},{"id":"I6","text":{"fr":"","en":"Repainting of the workshops planned in three years","es":""},"category":"FUTURE"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000031","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"FOOD","tested_point":"INDEPENDENT_OF_FUTURE_ACTIONS","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"no-future-operations"},"references":["IAS 37 §18","IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"A regulation published in N requires industrial bakeries still operating on 1 July N+1 to replace their ovens with lower-emission models. For Vermali, a fictitious bakery, the cost is estimated at 300,000. What should be recognised at 31 December N?","es":""},"explanation":{"fr":"","en":"No provision: the expenditure can be avoided by the entity's future actions (stopping the activity, changing the process); it concerns future operations, not a past event (IAS 37, paras. 18 and 19).","es":""},"common_error":{"fr":"","en":"Believing that publication of the regulation is the obligating event for replacing the ovens.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A provision of 300,000, as the law is published","es":""},"correct":false,"feedback":{"fr":"","en":"The law only bears on future activity; Vermali can avoid the expenditure through its future actions.","es":""}},{"id":"C","text":{"fr":"","en":"A provision of 150,000, for the half of N+1 already covered by the regulation","es":""},"correct":false,"feedback":{"fr":"","en":"No part of the expenditure relates to a past event; spreading it does not create an obligation.","es":""}},{"id":"D","text":{"fr":"","en":"A contingent liability of 300,000","es":""},"correct":false,"feedback":{"fr":"","en":"There is neither a present nor a possible obligation arising from a past event: the expenditure relates to future operations.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000032","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"PROFESSIONAL_JUDGMENT","format":"MINI_CASE","context":"ELECTRONICS","tested_point":"COMMUNICATED_DECISION","difficulty":"ADVANCED","estimated_time_s":540,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"another-party"},"references":["IAS 37 §17","IAS 37","IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Analyse Talvique's decision and quantify its consequences at 31 December N.","es":""},"explanation":{"fr":"","en":"A management decision creates a constructive obligation at the year end only if it has been communicated before the year end to those affected, in a sufficiently specific manner to raise a valid expectation (IAS 37, para. 20); the past event is then an obligating event, the entity having no realistic alternative (IAS 37, para. 17).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Talvique, a fictitious maker of smart speakers, has discovered that a model sold in N overheats. No legal obligation requires it to refund beyond the warranty, which has already expired for these units.","es":""},"exhibits":[{"title":{"fr":"","en":"Timeline and data (case data)","es":""},"body":{"fr":"","en":"- 10 December N: the board decides to refund 75 per speaker returned.\n- 20 December N: press release and email to each registered buyer, specifying the amount, the procedure and the deadline (30 June N+1).\n- Speakers concerned: 3,200; expected return rate, based on a comparable operation: 60%.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Is there an obligation at 31 December N?","es":""},"explanation":{"fr":"","en":"Yes: the decision was communicated before the year end to the buyers, with amount, procedure and date: it created a valid expectation (IAS 37, para. 20) and Talvique has no realistic alternative (IAS 37, para. 17). It is a constructive obligation (IAS 37, para. 10).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, a constructive obligation arising from the communication of 20 December","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Yes, a legal obligation arising from the decision of 10 December","es":""},"correct":false,"feedback":{"fr":"","en":"No law or contract requires the refund; the decision alone, not communicated, created no obligation.","es":""}},{"id":"C","text":{"fr":"","en":"No: without a legal obligation, there is never an obligation","es":""},"correct":false,"feedback":{"fr":"","en":"An obligation can be constructive, arising from the entity's actions that create a valid expectation.","es":""}}],"id":"P1","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"If the press release had been issued on 15 January N+1, Talvique would still have had to provide for the refund at 31 December N, as the decision was taken on 10 December.","es":""},"explanation":{"fr":"","en":"False. A decision not communicated before the year end does not create a constructive obligation at the year end (IAS 37, para. 20).","es":""},"common_error":{"fr":"","en":"Dating the constructive obligation at the board decision: it is communication to others, before year-end, that creates it.","es":""},"format":"TRUE_FALSE","answer":false,"id":"P2","dimension":"RULE_KNOWLEDGE"},{"prompt":{"fr":"","en":"Calculate the provision at 31 December N (best estimate, effect of discounting not material).","es":""},"explanation":{"fr":"","en":"Expected returns: 3,200 × 60% = 1,920 speakers; provision: 1,920 × 75 = 144,000. The return rate is case data based on experience.","es":""},"common_error":{"fr":"","en":"Providing for all the speakers affected: the expected return rate is applied before multiplying by the unit refund.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Speakers concerned","es":""},"value":"3200","unit":"UNITS"},{"label":{"fr":"","en":"Expected return rate","es":""},"value":"60","unit":"PERCENT"},{"label":{"fr":"","en":"Refund per speaker","es":""},"value":"75","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Number of expected returns","es":""},"answer":1920,"tolerance":0,"unit":"UNITS"},{"id":"S2","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":144000,"tolerance":0,"unit":"EUR"}],"id":"P3","dimension":"CALCULATION","formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Number of expected returns","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Speakers concerned","es":""},"value":3200,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Expected return rate","es":""},"value":60,"unit":"PERCENT"}],"result":1920,"unit":"UNITS"},{"step":"S2","meaning":{"fr":"","en":"Provision at 31 December N","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Number of expected returns","es":""},"value":1920,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Refund per speaker","es":""},"value":75,"unit":"EUR"}],"result":144000,"unit":"EUR"}],"references":["REF.IAS37.17","REF.IAS37.20","REF.IAS37.10"]}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000033","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"COMMUNICATED_DECISION","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"another-party"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"An obligation can exist even if the identity of the party to whom the entity is committed is not known, for example the public at large.","es":""},"explanation":{"fr":"","en":"True. An obligation always involves another party, but its identity may remain unknown, such as the public at large (IAS 37, para. 20).","es":""},"common_error":{"fr":"","en":"Requiring the creditor to be identified: the obligation can exist towards the public at large.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000034","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"REAL_ESTATE","tested_point":"DRAFT_LEGISLATION","difficulty":"ADVANCED","estimated_time_s":90,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"new-legislation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Fontarel, a fictitious property company, owns old buildings. At 31 December N, a bill requiring the removal of certain insulating materials is being debated in Parliament; its content (materials covered, deadlines) is still being amended. What treatment at 31 December N?","es":""},"explanation":{"fr":"","en":"Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is virtually certain to be enacted as drafted (IAS 37, para. 22). As the text is still being amended, no obligation exists at the year end.","es":""},"common_error":{"fr":"","en":"Providing as soon as a bill is known.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No obligation: enactment of the text as drafted is not virtually certain","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A provision now, as the law will probably be passed","es":""},"correct":false,"feedback":{"fr":"","en":"For a proposed law, the threshold is not \"probable\": enactment as drafted must be virtually certain.","es":""}},{"id":"C","text":{"fr":"","en":"A constructive obligation arising from the parliamentary debate","es":""},"correct":false,"feedback":{"fr":"","en":"A public debate does not result from Fontarel's actions; it does not create a constructive obligation for it.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000035","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"MINING","tested_point":"LATER_OBLIGATING_EVENT","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"later-obligation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A former quarry left sludge deposits that nothing required to be treated. In N, a law that has been finally enacted requires operators to rehabilitate sites damaged in this way. The damage caused in the past becomes an obligating event in N.","es":""},"explanation":{"fr":"","en":"True. An event that does not give rise to an obligation immediately may do so later, in particular because of changes in the law: environmental damage becomes an obligating event when a new law requires it to be rectified (IAS 37, para. 21).","es":""},"common_error":{"fr":"","en":"Thinking an old damage can no longer create an obligation: a new law can turn it into an obligating event when enacted.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000036","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"AGRICULTURE","tested_point":"LATER_OBLIGATING_EVENT","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"later-obligation"},"references":["IAS 37","IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"For years, the spreading activities of Saltrave, a fictitious farming cooperative, have damaged a riverbank, without any offence or legal obligation to repair. On 5 November N, its chairman publicly undertakes, before the press and local councillors, to fund the restoration of the bank by the end of N+1, specifying the works and their budget. When does the obligating event arise?","es":""},"explanation":{"fr":"","en":"Damage becomes an obligating event when the entity publicly accepts responsibility for rectifying it, through a sufficiently specific statement creating a constructive obligation (IAS 37, paras. 21 and 10). The public undertaking of 5 November N creates that valid expectation.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"On 5 November N, with the specific public undertaking","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"At the time of the first spreading, years earlier","es":""},"correct":false,"feedback":{"fr":"","en":"At that time the spreading created neither a legal nor a constructive obligation.","es":""}},{"id":"C","text":{"fr":"","en":"When the works start in N+1","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation exists before the works: the public undertaking leaves no realistic alternative.","es":""}},{"id":"D","text":{"fr":"","en":"Never, for lack of a law","es":""},"correct":false,"feedback":{"fr":"","en":"A constructive obligation is enough; the law is not the only source of obligations.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000037","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"TRANSPORT","tested_point":"NO_PROVISION_FUTURE_COSTS","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"no-future-operations"},"references":["IAS 37 §18","IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"The accounting department of Clarivo, a fictitious coach operator, proposes the following provisions at 31 December N. Spot those that do not comply.","es":""},"explanation":{"fr":"","en":"Financial statements describe the position at the year end: no provision for costs to be incurred to operate in the future (IAS 37, para. 18). Only obligations arising from past events and independent of future actions are provided for, such as rectifying damage already caused (IAS 37, para. 19).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"Provision of 90,000 to train drivers on the new ticketing software rolled out in N+1.","es":""},"erroneous":true,"correction":{"fr":"","en":"A cost of future operations, avoidable: no provision.","es":""}},{"id":"S2","text":{"fr":"","en":"Provision of 45,000 to clean up the depot site, contaminated by a diesel leak in N, which the law requires to be treated.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"Provision of 210,000 for replacing the coach seats, planned for N+2.","es":""},"erroneous":true,"correction":{"fr":"","en":"Clarivo can sell its coaches or change its programme: no present obligation, no provision.","es":""}},{"id":"S4","text":{"fr":"","en":"No provision for the charging points that regulations will require in depots still operated in N+2.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000038","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"PROFESSIONAL_JUDGMENT","format":"MINI_CASE","context":"CHEMICALS","tested_point":"PRESENT_OBLIGATION_FILE","difficulty":"EXPERT","estimated_time_s":660,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"judgment"},"references":["IAS 37 §15","IAS 37 §16","IAS 37 §18","IAS 37"],"exercise":{"prompt":{"fr":"","en":"You are reviewing Deltanor's \"obligations\" file at 31 December N. Answer the three questions.","es":""},"explanation":{"fr":"","en":"Whether a present obligation exists is assessed using all available evidence, including the opinion of experts and events after the reporting period (IAS 37, paras. 15 and 16). A decision not communicated does not create an obligation (IAS 37, para. 20); expenditure avoidable by future actions is not provided for (IAS 37, para. 18). Documenting the judgement is good practice, not a requirement of a specific paragraph.","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Deltanor, a fictitious chemicals distributor, authorises its N financial statements on 20 March N+1. Three points remain open.","es":""},"exhibits":[{"title":{"fr":"","en":"Open points (case data)","es":""},"body":{"fr":"","en":"1. A neighbouring warehouse burnt down in November N; its owner blames a drum badly stored by Deltanor. At 31 December, two experts disagree. On 2 March N+1, the report of the official laboratory, commissioned before the year end, concludes that the fire started from a Deltanor drum.\n2. On 15 December N, the executive committee decided to compensate the customers of a mislabelled batch, but did not inform anyone before 12 January N+1.\n3. The CEO wants to provide for the costs of upgrading a warehouse he is thinking of keeping after N+2, \"to smooth profit\".","es":""}}],"parts":[{"prompt":{"fr":"","en":"Point 1: what conclusion at 31 December N?","es":""},"explanation":{"fr":"","en":"The report of 2 March, after the year end, sheds light on the origin of a fire that occurred in N: with this report, the obligation is more likely than not at the year end; a provision is recognised if the outflow is probable and can be estimated (IAS 37, paras. 15 and 16).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Present obligation more likely than not: provision in the N financial statements","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Contingent liability, as the experts disagreed at 31 December","es":""},"correct":false,"feedback":{"fr":"","en":"The assessment takes account of evidence after the year end that sheds light on the situation at that date.","es":""}},{"id":"C","text":{"fr":"","en":"Provision in the N+1 financial statements only","es":""},"correct":false,"feedback":{"fr":"","en":"The fire in N is the past event; the report only sheds light on it.","es":""}}],"id":"P1","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"Points 2 and 3: which statements are correct?","es":""},"explanation":{"fr":"","en":"The decision of 15 December, communicated on 12 January, does not create a constructive obligation at 31 December (IAS 37, para. 20). The costs of upgrading a warehouse that is kept relate to future operations: no provision (IAS 37, para. 18). Smoothing profit is never a reason for a provision.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Point 2: no provision at 31 December N","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Point 3: no provision","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Point 2: provision, as the decision was taken before the year end","es":""},"correct":false,"feedback":{"fr":"","en":"Without communication before the year end, customers have no valid expectation.","es":""}},{"id":"D","text":{"fr":"","en":"Point 3: a provision is acceptable if disclosed in the notes","es":""},"correct":false,"feedback":{"fr":"","en":"Disclosure in a note does not make an avoidable future cost recognisable.","es":""}}],"id":"P2","dimension":"ANALYSIS"},{"prompt":{"fr":"","en":"Which documents should the review file contain to support the conclusion on point 1 (good practice)?","es":""},"explanation":{"fr":"","en":"The file must show the evidence on which the assessment rests: expert opinions and the report after the year end (IAS 37, para. 16), the date of the fire, the basis for the estimate. Management's wishes about profit are not evidence.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The two diverging expert opinions and the laboratory report of 2 March N+1","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Evidence of the date of the fire (November N)","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The basis for estimating the amount (claim, lawyer's opinion)","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The profit budget wanted by the CEO","es":""},"correct":false,"feedback":{"fr":"","en":"A profit target is not evidence of whether an obligation exists.","es":""}}],"id":"P3","dimension":"DOCUMENTATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000039","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RECOGNITION","format":"MATCHING","context":"TELECOM","tested_point":"LEGAL_OR_CONSTRUCTIVE","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000004","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"obligating-event-rule"},"references":["IAS 37 §17","IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Match each situation of Vintora, a fictitious telecom operator, to the type of obligation it creates at the year end.","es":""},"explanation":{"fr":"","en":"An obligating event leaves no realistic alternative to settling the obligation, either because the law or a contract can enforce it (legal obligation), or because the entity has created valid expectations in others (constructive obligation) (IAS 37, paras. 17 and 10). An intention that is not communicated creates nothing.","es":""},"common_error":{"fr":"","en":"Seeing an obligation in the board's unannounced intention: only law, a contract or a valid expectation created in others gives rise to one.","es":""},"format":"MATCHING","left":[{"id":"L1","text":{"fr":"","en":"The licence contract requires the antennas to be removed on expiry; they are installed","es":""}},{"id":"L2","text":{"fr":"","en":"Vintora has always, and publicly, compensated customers without network for more than 48 hours; a 3-day outage occurred in December","es":""}},{"id":"L3","text":{"fr":"","en":"The board is considering, without announcing it, offering a free month to loyal customers","es":""}}],"right":[{"id":"R1","text":{"fr":"","en":"Legal obligation","es":""}},{"id":"R2","text":{"fr":"","en":"Constructive obligation","es":""}},{"id":"R3","text":{"fr":"","en":"No obligation","es":""}}],"pairs":[{"left":"L1","right":"R1"},{"left":"L2","right":"R2"},{"left":"L3","right":"R3"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000040","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"CONTINGENT_LIABILITY_NOT_RECOGNISED","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §27","IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"A contingent liability is recognised in the balance sheet at its probability-weighted amount.","es":""},"explanation":{"fr":"","en":"False. The entity does not recognise a contingent liability (IAS 37, para. 27); it discloses it in the notes, unless the possibility of an outflow of resources is remote (IAS 37, para. 28).","es":""},"common_error":{"fr":"","en":"Applying an expected value measurement to a contingent liability.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000041","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"MEDIA","tested_point":"CONTINGENT_LIABILITY_TRIAGE","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §28","IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"A singer is suing Myrelle, a fictitious recording studio, for using a 2-second excerpt. The lawyers consider the absence of a present obligation much more likely and any outflow of resources remote. What treatment?","es":""},"explanation":{"fr":"","en":"As the absence of a present obligation is more likely, no provision is recognised; a contingent liability would be disclosed, unless the outflow is remote (IAS 37, paras. 16 and 28). Here, the outflow is remote: no disclosure is required.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Neither a provision nor disclosure","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Contingent liability disclosed in the notes","es":""},"correct":false,"feedback":{"fr":"","en":"Disclosure is not required when the possibility of an outflow is remote.","es":""}},{"id":"C","text":{"fr":"","en":"Provision for the amount claimed","es":""},"correct":false,"feedback":{"fr":"","en":"No present obligation is more likely than not: no provision.","es":""}},{"id":"D","text":{"fr":"","en":"Provision of 10% of the amount claimed, out of prudence","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not justify a provision without a present obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000042","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"CALCULATION","format":"CALCULATION","context":"MINING","tested_point":"JOINT_AND_SEVERAL_SPLIT","difficulty":"INTERMEDIATE","estimated_time_s":180,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"joint-and-several"},"references":["IAS 37 §29","IAS 37 §58"],"exercise":{"prompt":{"fr":"","en":"Pradolin, a fictitious mining operator, is jointly and severally liable, with two solvent partners, for the rehabilitation of a shared settling pond estimated at 1,500,000 (best estimate, discounting not material). Their agreement allocates 30% of the cost to Pradolin. Calculate the amounts at 31 December N.","es":""},"explanation":{"fr":"","en":"Pradolin provides for the part for which an outflow is probable: 1,500,000 × 30% = 450,000 (IAS 37, para. 29). The part the partners are expected to bear, 1,050,000, is a contingent liability (IAS 37, paras. 29 and 58), disclosed in the notes.","es":""},"common_error":{"fr":"","en":"Providing for the entire debt on the grounds of joint and several liability.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Total rehabilitation cost","es":""},"value":"1500000","unit":"EUR"},{"label":{"fr":"","en":"Pradolin's share","es":""},"value":"30","unit":"PERCENT"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision recognised","es":""},"answer":450000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Contingent liability (partners' share)","es":""},"answer":1050000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Provision recognised","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Total rehabilitation cost","es":""},"value":1500000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Pradolin's share","es":""},"value":30,"unit":"PERCENT"}],"result":450000,"unit":"EUR","rationale":{"fr":"","en":"Pradolin provides for the part for which an outflow is probable: 1,500,000 × 30% = 450,000 (IAS 37, para. 29).","es":""}}],"references":["REF.IAS37.29","REF.IAS37.58"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000043","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"CALCULATION","format":"CALCULATION","context":"MINING","tested_point":"JOINT_AND_SEVERAL_SPLIT","difficulty":"ADVANCED","estimated_time_s":240,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"joint-and-several"},"references":["IAS 37 §29","IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"Pradolin case continued: the rehabilitation cost is still estimated at 1,500,000. Agreed shares: Pradolin 30%, partner B 45%, partner C 25%. In N+1, C goes into liquidation and will pay nothing; Pradolin and B agree that Pradolin will bear 40% of C's share (case data). Calculate the amounts at 31 December N+1.","es":""},"explanation":{"fr":"","en":"Pradolin's probable share: 30% + 25% × 40% = 40%, i.e. 600,000 (IAS 37, para. 29). The outflow that has become probable for part of the former contingent liability is provided for in the period of the change: an additional charge of 600,000 − 450,000 = 150,000 in N+1 (IAS 37, para. 30). Remaining contingent liability (B's expected share): 1,500,000 − 600,000 = 900,000.","es":""},"common_error":{"fr":"","en":"Taking over the whole of the defaulting partner's share, or conversely leaving the provision unchanged.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Total rehabilitation cost","es":""},"value":"1500000","unit":"EUR"},{"label":{"fr":"","en":"Provision at 31 December N","es":""},"value":"450000","unit":"EUR"},{"label":{"fr":"","en":"Part of C's share taken over by Pradolin","es":""},"value":"40","unit":"PERCENT"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 31 December N+1","es":""},"answer":600000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Additional charge in N+1","es":""},"answer":150000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Remaining contingent liability","es":""},"answer":900000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S2","meaning":{"fr":"","en":"Additional charge in N+1","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision at 31 December N+1","es":""},"value":600000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provision at 31 December N","es":""},"value":450000,"unit":"EUR"}],"result":150000,"unit":"EUR","rationale":{"fr":"","en":"The outflow that has become probable for part of the former contingent liability is provided for in the period of the change: an additional charge of 600,000 − 450,000 = 150,000 in N+1 (IAS 37, para. 30).","es":""}},{"step":"S3","meaning":{"fr":"","en":"Remaining contingent liability","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Total rehabilitation cost","es":""},"value":1500000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provision at 31 December N+1","es":""},"value":600000,"unit":"EUR"}],"result":900000,"unit":"EUR"}],"references":["REF.IAS37.29","REF.IAS37.30"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000044","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"HOSPITALITY","tested_point":"REASSESS_CONTINGENT_LIABILITY","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"liability-reassessment"},"references":["IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Alcyra, a fictitious hotel chain, disclosed a contingent liability for a dispute with a tour operator. In September N+1, the court of appeal rules unfavourably in an identical case: the outflow becomes probable, estimated at 85,000. Record the N+1 entry.","es":""},"explanation":{"fr":"","en":"Contingent liabilities are assessed continually: when the outflow becomes probable, a provision is recognised in the financial statements of the period of the change, here N+1 (IAS 37, para. 30): debit Provision expense 85,000, credit Provision for litigation 85,000. The N financial statements are not changed.","es":""},"common_error":{"fr":"","en":"Changing year N's financial statements: the provision is recognised in the period in which the outflow becomes probable, here N+1.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"LITIGATION_PROVISION","text":{"fr":"","en":"Provision for litigation","es":""}},{"id":"EQUITY","text":{"fr":"","en":"Reserves","es":""}},{"id":"CONTINGENT_LIABILITY","text":{"fr":"","en":"Contingent liability","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":85000},{"id":"L2","account":"LITIGATION_PROVISION","side":"CREDIT","amount":85000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000045","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"EDUCATION","tested_point":"REASSESS_CONTINGENT_LIABILITY","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"liability-reassessment"},"references":["IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"A contingent liability disclosed in the N financial statements of a private school becomes a probable outflow in May N+1, after those financial statements were approved. What should be done?","es":""},"explanation":{"fr":"","en":"A provision is recognised in the financial statements of the period in which the change in probability occurs (IAS 37, para. 30), i.e. N+1, without restating N.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provision in the N+1 financial statements","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Restate the N financial statements to include the provision","es":""},"correct":false,"feedback":{"fr":"","en":"The change in probability is an N+1 event; the N financial statements correctly reflected the situation then known.","es":""}},{"id":"C","text":{"fr":"","en":"Continue to disclose it until payment","es":""},"correct":false,"feedback":{"fr":"","en":"As soon as the outflow is probable and can be estimated, a provision must be recognised.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000046","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"CONSTRUCTION","tested_point":"JOINT_AND_SEVERAL_SPLIT","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"joint-and-several"},"references":["IAS 37 §29","IAS 37 §58","IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"The three companies of the Ermeline consortium (construction, fictitious) are jointly and severally ordered to repair a bridge for 1,200,000; Ermeline's share under the consortium agreement is 50% and its partners are solvent. Spot the errors in the accountant's memo.","es":""},"explanation":{"fr":"","en":"The entity provides for its probable share, 600,000, and treats the share expected to be borne by the others, 600,000, as a contingent liability (IAS 37, paras. 29 and 58), disclosed unless the outflow is remote (IAS 37, para. 28).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"We provide for 1,200,000, because the project owner can claim the whole amount from us.","es":""},"erroneous":true,"correction":{"fr":"","en":"Only the share for which an outflow is probable is provided for: 600,000.","es":""}},{"id":"S2","text":{"fr":"","en":"The share expected to be borne by the partners is a contingent liability.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"As the partners are solvent, their share calls for no disclosure in the notes.","es":""},"erroneous":true,"correction":{"fr":"","en":"The partners' share is a contingent liability, disclosed unless the outflow is remote; the partners' solvency alone does not make the outflow remote, as the entity remains liable for the whole.","es":""}},{"id":"S4","text":{"fr":"","en":"If a partner defaulted, the share probably taken over would be provided for in the period in which that change occurs.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000047","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"GENERIC","tested_point":"CONTINGENT_LIABILITY_TRIAGE","difficulty":"BEGINNER","estimated_time_s":120,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"how"},"references":["IAS 37 §27","IAS 37 §28","IAS 37 §23"],"exercise":{"prompt":{"fr":"","en":"For each obligation (all can be reliably estimated), choose the treatment.","es":""},"explanation":{"fr":"","en":"Present obligation and probable outflow: provision (IAS 37, para. 23). Possible obligation, or outflow not probable: contingent liability not recognised (IAS 37, para. 27), disclosed unless the outflow is remote (IAS 37, para. 28).","es":""},"common_error":{"fr":"","en":"Providing for an obligation whose outflow is only possible, or disclosing a remote outflow: only a probable outflow gives a provision; a remote one needs nothing.","es":""},"format":"CLASSIFICATION","categories":[{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}},{"id":"DISCLOSE","text":{"fr":"","en":"Contingent liability disclosed","es":""}},{"id":"NOTHING","text":{"fr":"","en":"Neither provision nor disclosure","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Present obligation, outflow more likely than not","es":""},"category":"PROVISION"},{"id":"I2","text":{"fr":"","en":"Present obligation, outflow possible but not probable, not remote","es":""},"category":"DISCLOSE"},{"id":"I3","text":{"fr":"","en":"Possible obligation, whose existence depends on a future decision of a regulator, outflow not remote","es":""},"category":"DISCLOSE"},{"id":"I4","text":{"fr":"","en":"Possible obligation, outflow remote","es":""},"category":"NOTHING"},{"id":"I5","text":{"fr":"","en":"Present obligation, outflow remote","es":""},"category":"NOTHING"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000048","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"CONTINGENT_ASSET_THRESHOLDS","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §31","IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"An entity that claims damages in court from a competitor recognises a receivable as soon as its lawyers consider success probable.","es":""},"explanation":{"fr":"","en":"False. A contingent asset is not recognised (IAS 37, para. 31); a probable inflow only leads to disclosure in the notes (IAS 37, para. 34). The asset is recognised only when the inflow is virtually certain (IAS 37, para. 33).","es":""},"common_error":{"fr":"","en":"Applying the \"probable\" threshold for provisions to an asset.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000049","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"AVIATION","tested_point":"CONTINGENT_ASSET_THRESHOLDS","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §31","IAS 37 §32","IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Tessaline, a fictitious regional airline, has brought several claims. Classify each according to its treatment at 31 December N.","es":""},"explanation":{"fr":"","en":"Contingent assets often arise from a claim pursued through legal processes with an uncertain outcome (IAS 37, para. 32) and are not recognised (IAS 37, para. 31). Probable inflow: disclosure (IAS 37, para. 34); virtually certain inflow: the asset is no longer contingent and is recognised (IAS 37, para. 33); inflow merely possible: neither recognition nor disclosure.","es":""},"common_error":{"fr":"","en":"Recognising an asset whose inflow is only probable: it is only disclosed; only a virtually certain inflow is recognised.","es":""},"format":"CLASSIFICATION","categories":[{"id":"RECOGNISE","text":{"fr":"","en":"Asset recognised","es":""}},{"id":"DISCLOSE","text":{"fr":"","en":"Contingent asset disclosed","es":""}},{"id":"NOTHING","text":{"fr":"","en":"Neither recognition nor disclosure","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Compensation set by a final judgment against a solvent engine maker, payable in January","es":""},"category":"RECOGNISE"},{"id":"I2","text":{"fr":"","en":"Claim against an airport for a damaged runway; success considered probable, proceedings ongoing","es":""},"category":"DISCLOSE"},{"id":"I3","text":{"fr":"","en":"Claim against a catering supplier, success merely possible","es":""},"category":"NOTHING"},{"id":"I4","text":{"fr":"","en":"Claim against a bankrupt travel agency, chances considered low","es":""},"category":"NOTHING"},{"id":"I5","text":{"fr":"","en":"Irrevocable settlement signed in December with a solvent manufacturer","es":""},"category":"RECOGNISE"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000050","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","format":"MATCHING","context":"GENERIC","tested_point":"ASYMMETRIC_THRESHOLDS","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"how"},"references":["IAS 37 §14","IAS 37 §28","IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Match each treatment to the probability threshold that triggers it.","es":""},"explanation":{"fr":"","en":"Provision: probable outflow, i.e. more likely than not (IAS 37, para. 14); contingent liability disclosed: outflow not remote (IAS 37, para. 28); asset recognised: virtually certain inflow (IAS 37, para. 33); contingent asset disclosed: probable inflow (IAS 37, para. 34). The asymmetry avoids recognising income that may never be realised.","es":""},"common_error":{"fr":"","en":"Applying the same threshold to assets and liabilities: the asset requires a virtually certain inflow, the provision only a probable outflow.","es":""},"format":"MATCHING","left":[{"id":"L1","text":{"fr":"","en":"Recognise a provision","es":""}},{"id":"L2","text":{"fr":"","en":"Disclose a contingent liability","es":""}},{"id":"L3","text":{"fr":"","en":"Recognise an asset","es":""}},{"id":"L4","text":{"fr":"","en":"Disclose a contingent asset","es":""}}],"right":[{"id":"R1","text":{"fr":"","en":"Probable outflow (more likely than not)","es":""}},{"id":"R2","text":{"fr":"","en":"Outflow not remote","es":""}},{"id":"R3","text":{"fr":"","en":"Virtually certain inflow","es":""}},{"id":"R4","text":{"fr":"","en":"Probable inflow","es":""}},{"id":"R5","text":{"fr":"","en":"Merely possible inflow","es":""}}],"pairs":[{"left":"L1","right":"R1"},{"left":"L2","right":"R2"},{"left":"L3","right":"R3"},{"left":"L4","right":"R4"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000051","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"INDUSTRIAL","tested_point":"RECOGNISE_WHEN_VIRTUALLY_CERTAIN","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"asset-reassessment"},"references":["IAS 37","IAS 37 §33"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Ondaline, a fictitious packaging maker, disclosed a contingent asset: a claim against a supplier of defective machines. On 14 October N+1, the supplier and its insurer, both solvent, sign an irrevocable settlement of 175,000, payable in February N+2. Record the N+1 entry.","es":""},"explanation":{"fr":"","en":"The inflow becomes virtually certain in N+1: the asset and the related income are recognised in the period of the change (IAS 37, paras. 35 and 33): debit Receivable 175,000, credit Other income 175,000.","es":""},"common_error":{"fr":"","en":"Waiting for the February N+2 collection to recognise the asset.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"RECEIVABLE","text":{"fr":"","en":"Receivable","es":""}},{"id":"OTHER_INCOME","text":{"fr":"","en":"Other income","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}},{"id":"REVENUE","text":{"fr":"","en":"Revenue","es":""}},{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}}],"lines":[{"id":"L1","account":"RECEIVABLE","side":"DEBIT","amount":175000},{"id":"L2","account":"OTHER_INCOME","side":"CREDIT","amount":175000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000052","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS","IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"ANALYSIS","format":"SINGLE_CHOICE","context":"TEXTILE","tested_point":"ASYMMETRIC_THRESHOLDS","difficulty":"ADVANCED","estimated_time_s":90,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"why"},"references":["IAS 37 §23","IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Nemorad, a fictitious clothing manufacturer, is being sued by a customer for 200,000 (present obligation, outflow assessed at 70%) and is itself suing a supplier for 150,000 (success assessed at 70%). What treatment at 31 December N?","es":""},"explanation":{"fr":"","en":"Same probability, different treatments: the probable outflow triggers a provision (IAS 37, para. 23); the probable inflow only disclosure, the asset being recognised only if virtually certain (IAS 37, paras. 33 and 34). The amount of the provision is still the best estimate, to be determined; the probabilities are case data.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provision for the customer's claim; disclosure only for the claim against the supplier","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provision and receivable, as the probability is the same","es":""},"correct":false,"feedback":{"fr":"","en":"The thresholds are asymmetric: an asset requires virtual certainty.","es":""}},{"id":"C","text":{"fr":"","en":"Net provision of 50,000","es":""},"correct":false,"feedback":{"fr":"","en":"A separate obligation and contingent claim are not offset.","es":""}},{"id":"D","text":{"fr":"","en":"Disclosure of both files, recognising nothing","es":""},"correct":false,"feedback":{"fr":"","en":"As the outflow is probable, the customer's claim calls for a provision, not mere disclosure.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000053","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"APPLICATION","format":"MINI_CASE","context":"AGRICULTURE","tested_point":"CONTINGENT_ASSET_TIMELINE","difficulty":"ADVANCED","estimated_time_s":480,"lesson_id":"LS.IAS37.000005","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"asset-reassessment"},"references":["IAS 37 §33","IAS 37 §34","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Follow Belcorde's claim over three year ends.","es":""},"explanation":{"fr":"","en":"A contingent asset is assessed continually: disclosed while the inflow is probable, it is recognised, with the related income, in the period in which the inflow becomes virtually certain (IAS 37, paras. 34 and 35); the asset is then no longer contingent (IAS 37, para. 33). Virtual certainty here results from the case data (final judgment, solvent debtor).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Belcorde, a fictitious wine cooperative, is suing a tank manufacturer whose defect spoiled a harvest; it claims 320,000.","es":""},"exhibits":[{"title":{"fr":"","en":"Timeline (case data)","es":""},"body":{"fr":"","en":"- 31 December N: the lawyer considers success probable.\n- June N+1: favourable first-instance judgment, 260,000 awarded; the manufacturer appeals.\n- November N+2: the court of appeal confirms; no further appeal possible; the manufacturer, which is solvent, will pay in January N+3.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Treatment at 31 December N?","es":""},"explanation":{"fr":"","en":"Probable inflow: contingent asset disclosed, nothing in the balance sheet (IAS 37, para. 34).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Disclosure in the notes","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Receivable of 320,000","es":""},"correct":false,"feedback":{"fr":"","en":"A probable inflow is not enough to recognise an asset.","es":""}},{"id":"C","text":{"fr":"","en":"Nothing","es":""},"correct":false,"feedback":{"fr":"","en":"A probable inflow requires disclosure.","es":""}}],"id":"P1","dimension":"RECOGNITION"},{"prompt":{"fr":"","en":"Treatment at 31 December N+1?","es":""},"explanation":{"fr":"","en":"A judgment under appeal does not make the inflow virtually certain (assessment of the case facts): the contingent asset is still disclosed (IAS 37, paras. 34 and 35).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Disclosure in the notes, appeal pending","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Receivable and income of 260,000","es":""},"correct":false,"feedback":{"fr":"","en":"The appeal leaves real uncertainty: the inflow is not virtually certain.","es":""}}],"id":"P2","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"Record the N+2 entry.","es":""},"explanation":{"fr":"","en":"Final decision, solvent debtor: the inflow is virtually certain in N+2; receivable and income of 260,000 (IAS 37, para. 35). The 60,000 not awarded is never recognised.","es":""},"common_error":{"fr":"","en":"Recognising the receivable as soon as success is probable, or for the amount claimed: it is recognised when the inflow becomes virtually certain, for the amount awarded.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"RECEIVABLE","text":{"fr":"","en":"Receivable","es":""}},{"id":"OTHER_INCOME","text":{"fr":"","en":"Other income","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}},{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}}],"lines":[{"id":"L1","account":"RECEIVABLE","side":"DEBIT","amount":260000},{"id":"L2","account":"OTHER_INCOME","side":"CREDIT","amount":260000}],"id":"P3","dimension":"JOURNAL_ENTRY"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000054","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"GENERIC","tested_point":"PRE_TAX_MEASUREMENT","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"pre-tax-and-risk"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A litigation provision of 100,000 can be recognised at 75,000 when the tax rate is 25%, as the expense will be deductible.","es":""},"explanation":{"fr":"","en":"False. The provision is measured before tax; its tax consequences and changes in them are dealt with under IAS 12 (IAS 37, para. 41).","es":""},"common_error":{"fr":"","en":"Measuring the provision net of tax.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000055","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"GENERIC","tested_point":"BEST_ESTIMATE_DEFINITION","difficulty":"BEGINNER","estimated_time_s":60,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Which amount corresponds to the best estimate of a provision?","es":""},"explanation":{"fr":"","en":"The provision is the best estimate of the expenditure required to settle the present obligation at the year end (IAS 37, para. 36): the amount the entity would rationally pay to settle the obligation at that date or to transfer it to a third party, even if such settlement or transfer is in practice impossible or prohibitively expensive (IAS 37, para. 37).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The amount the entity would rationally pay at the year end to settle the obligation or transfer it to a third party","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The maximum amount the entity could have to pay","es":""},"correct":false,"feedback":{"fr":"","en":"The worst case is not the best estimate; uncertainty does not justify excessive provisions.","es":""}},{"id":"C","text":{"fr":"","en":"The amount claimed by the other party","es":""},"correct":false,"feedback":{"fr":"","en":"The claim is only one input; the best estimate rests on management judgement and the evidence available.","es":""}},{"id":"D","text":{"fr":"","en":"The amount net of the expected tax saving","es":""},"correct":false,"feedback":{"fr":"","en":"The provision is measured before tax.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000056","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","format":"CALCULATION","context":"HOME_APPLIANCES","tested_point":"EXPECTED_VALUE_LARGE_POPULATION","difficulty":"INTERMEDIATE","estimated_time_s":210,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"expected-value"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"Lumérac, a fictitious brand, sold 6,000 coffee machines with a one-year warranty in N. According to its history (case data): 88% without a claim, 9% with a minor repair at 40, 3% with a pump replacement at 260. Calculate the provision at 31 December N.","es":""},"explanation":{"fr":"","en":"For a large population, the obligation is estimated by weighting the possible outcomes by their probabilities, the expected value (IAS 37, para. 39). Per machine: 9% × 40 + 3% × 260 = 3.60 + 7.80 = 11.40; provision: 6,000 × 11.40 = 68,400.","es":""},"common_error":{"fr":"","en":"Using the most likely outcome (no claim) and providing nothing.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Machines sold under warranty","es":""},"value":"6000","unit":"UNITS"},{"label":{"fr":"","en":"Minor repair: probability","es":""},"value":"9","unit":"PERCENT"},{"label":{"fr":"","en":"Minor repair: cost","es":""},"value":"40","unit":"EUR"},{"label":{"fr":"","en":"Pump replacement: probability","es":""},"value":"3","unit":"PERCENT"},{"label":{"fr":"","en":"Pump replacement: cost","es":""},"value":"260","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Expected cost per machine","es":""},"answer":11.4,"tolerance":0.01,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":68400,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Expected cost per machine","es":""},"expression":"a * b + c * d","variables":[{"symbol":"a","meaning":{"fr":"","en":"Minor repair: probability","es":""},"value":9,"unit":"PERCENT"},{"symbol":"b","meaning":{"fr":"","en":"Minor repair: cost","es":""},"value":40,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Pump replacement: probability","es":""},"value":3,"unit":"PERCENT"},{"symbol":"d","meaning":{"fr":"","en":"Pump replacement: cost","es":""},"value":260,"unit":"EUR"}],"result":11.4,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Provision at 31 December N","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Machines sold under warranty","es":""},"value":6000,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Expected cost per machine","es":""},"value":11.4,"unit":"EUR"}],"result":68400,"unit":"EUR"}],"rationale":{"fr":"","en":"For a large population, the obligation is estimated by weighting the possible outcomes by their probabilities, the expected value (IAS 37, para. 39).","es":""},"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000057","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","format":"CALCULATION","context":"ENERGY","tested_point":"EXPECTED_VALUE_LARGE_POPULATION","difficulty":"ADVANCED","estimated_time_s":240,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"expected-value"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"Heliane, a fictitious installer, warrants for two years the 2,500 photovoltaic installations fitted in N. Statistics (case data): 80% without intervention, 15% with replacement of the inverter (600), 5% with full replacement of the panels (2,400). Calculate the provision and the single most likely outcome per installation.","es":""},"explanation":{"fr":"","en":"Expected value per installation: 15% × 600 + 5% × 2,400 = 90 + 120 = 210; provision: 2,500 × 210 = 525,000 (IAS 37, para. 39). The most likely outcome per installation is 0 (80%): it is not relevant for a large population.","es":""},"common_error":{"fr":"","en":"Using the most likely outcome (0) for 2,500 installations: for a large population, the expected value is used.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Installations under warranty","es":""},"value":"2500","unit":"UNITS"},{"label":{"fr":"","en":"Inverter replacement: probability","es":""},"value":"15","unit":"PERCENT"},{"label":{"fr":"","en":"Inverter replacement: cost","es":""},"value":"600","unit":"EUR"},{"label":{"fr":"","en":"Panel replacement: probability","es":""},"value":"5","unit":"PERCENT"},{"label":{"fr":"","en":"Panel replacement: cost","es":""},"value":"2400","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Expected cost per installation","es":""},"answer":210,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Provision","es":""},"answer":525000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Most likely outcome per installation","es":""},"answer":0,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Expected cost per installation","es":""},"expression":"a * b + c * d","variables":[{"symbol":"a","meaning":{"fr":"","en":"Inverter replacement: probability","es":""},"value":15,"unit":"PERCENT"},{"symbol":"b","meaning":{"fr":"","en":"Inverter replacement: cost","es":""},"value":600,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Panel replacement: probability","es":""},"value":5,"unit":"PERCENT"},{"symbol":"d","meaning":{"fr":"","en":"Panel replacement: cost","es":""},"value":2400,"unit":"EUR"}],"result":210,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Provision","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Installations under warranty","es":""},"value":2500,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Expected cost per installation","es":""},"value":210,"unit":"EUR"}],"result":525000,"unit":"EUR"}],"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000058","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","format":"CALCULATION","context":"LOGISTICS","tested_point":"RANGE_MIDPOINT","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"expected-value"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"The experts of Quessac Logistique, a fictitious company, estimate that repairing a damaged loading dock will cost between 140,000 and 220,000, each amount in the range being equally likely. Calculate the provision.","es":""},"explanation":{"fr":"","en":"For a continuous range of equally likely outcomes, the mid-point of the range is used (IAS 37, para. 39): (140,000 + 220,000) / 2 = 180,000.","es":""},"common_error":{"fr":"","en":"Using one end of the range: for equally likely outcomes over a continuous range, the midpoint is used.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Lower end of the range","es":""},"value":"140000","unit":"EUR"},{"label":{"fr":"","en":"Upper end of the range","es":""},"value":"220000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision","es":""},"answer":180000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Provision","es":""},"expression":"(a + b) / 2","variables":[{"symbol":"a","meaning":{"fr":"","en":"Lower end of the range","es":""},"value":140000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Upper end of the range","es":""},"value":220000,"unit":"EUR"}],"result":180000,"unit":"EUR","rationale":{"fr":"","en":"For a continuous range of equally likely outcomes, the mid-point of the range is used (IAS 37, para. 39): (140,000 + 220,000) / 2 = 180,000.","es":""}}],"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000059","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"CONSTRUCTION","tested_point":"RANGE_MIDPOINT","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"expected-value"},"references":["IAS 37 §39","IAS 37 §43"],"exercise":{"prompt":{"fr":"","en":"According to the expert, the cost of redoing a defective roof delivered by a roofer lies anywhere between 45,000 and 75,000, no amount being more likely than another. What provision?","es":""},"explanation":{"fr":"","en":"Continuous range of equally likely outcomes: mid-point of the range, 60,000 (IAS 37, para. 39). Taking the upper end out of prudence would deliberately overstate the liability (IAS 37, para. 43).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"60,000","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"45,000","es":""},"correct":false,"feedback":{"fr":"","en":"The lower end understates the obligation.","es":""}},{"id":"C","text":{"fr":"","en":"75,000","es":""},"correct":false,"feedback":{"fr":"","en":"The upper end, taken out of prudence, would deliberately overstate the liability.","es":""}},{"id":"D","text":{"fr":"","en":"No provision for lack of a precise amount","es":""},"correct":false,"feedback":{"fr":"","en":"A range is enough for a reliable estimate.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000060","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"PROFESSIONAL_JUDGMENT","format":"MINI_CASE","context":"PHARMA","tested_point":"SINGLE_OBLIGATION_ADJUSTMENT","difficulty":"EXPERT","estimated_time_s":600,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"single-obligation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Measure Nervalis's provision for its single dispute.","es":""},"explanation":{"fr":"","en":"For a single obligation, the individual most likely outcome may be the best estimate, but the entity considers the other outcomes: where they are mostly higher, the best estimate is a higher amount (IAS 37, para. 40). The standard does not set the adjustment method: the weighting used here is a documented management judgement (case data), based on the lawyers' opinion (IAS 37, para. 38).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Nervalis, a fictitious laboratory, is being sued by a hospital for delivering a non-compliant batch of infusion solutions in N. Its liability is more likely than not.","es":""},"exhibits":[{"title":{"fr":"","en":"Lawyers' opinion at 31 December N (case data)","es":""},"body":{"fr":"","en":"| Outcome | Probability | Amount |\n| --- | --- | --- |\n| Settlement | 50% | 200,000 |\n| Ordinary award | 35% | 320,000 |\n| Award including reputational damage | 15% | 450,000 |\n\nManagement documents its decision to use the weighted amount of these outcomes (professional judgement).","es":""}}],"parts":[{"prompt":{"fr":"","en":"The controller proposes 200,000, the most likely outcome. What should the answer be?","es":""},"explanation":{"fr":"","en":"The other outcomes (50% probability in total) are all higher: the best estimate is higher than the most likely outcome (IAS 37, para. 40).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Insufficient: as the other outcomes are all higher, the best estimate is higher","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Correct: for a single obligation, the most likely outcome is always used","es":""},"correct":false,"feedback":{"fr":"","en":"The most likely outcome is only a starting point; it is adjusted when the other outcomes are mostly higher or lower.","es":""}},{"id":"C","text":{"fr":"","en":"450,000, the least favourable outcome, must be used","es":""},"correct":false,"feedback":{"fr":"","en":"The worst case is not the best estimate.","es":""}}],"id":"P1","dimension":"ANALYSIS"},{"prompt":{"fr":"","en":"Calculate the weighted amount used by management.","es":""},"explanation":{"fr":"","en":"50% × 200,000 + 35% × 320,000 + 15% × 450,000 = 100,000 + 112,000 + 67,500 = 279,500. This amount results from the method chosen by management (case data), consistent with the requirement for an estimate higher than the most likely outcome; it is not required by the standard.","es":""},"common_error":{"fr":"","en":"Presenting the weighted amount as required by the standard: it is the method chosen by management to adjust the most likely outcome.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Settlement (50%)","es":""},"value":"200000","unit":"EUR"},{"label":{"fr":"","en":"Ordinary award (35%)","es":""},"value":"320000","unit":"EUR"},{"label":{"fr":"","en":"Award including reputational damage (15%)","es":""},"value":"450000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Weighted amount","es":""},"answer":279500,"tolerance":0,"unit":"EUR"}],"id":"P2","dimension":"CALCULATION","formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Weighted amount","es":""},"expression":"a * b + c * d + e * f","variables":[{"symbol":"a","meaning":{"fr":"","en":"Settlement · Probability","es":""},"value":50,"unit":"PERCENT"},{"symbol":"b","meaning":{"fr":"","en":"Settlement (50%)","es":""},"value":200000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Ordinary award · Probability","es":""},"value":35,"unit":"PERCENT"},{"symbol":"d","meaning":{"fr":"","en":"Ordinary award (35%)","es":""},"value":320000,"unit":"EUR"},{"symbol":"e","meaning":{"fr":"","en":"Award including reputational damage · Probability","es":""},"value":15,"unit":"PERCENT"},{"symbol":"f","meaning":{"fr":"","en":"Award including reputational damage (15%)","es":""},"value":450000,"unit":"EUR"}],"result":279500,"unit":"EUR"}],"references":["REF.IAS37.40","REF.IAS37.38"]}},{"prompt":{"fr":"","en":"What should the file contain to support this judgement (good practice)?","es":""},"explanation":{"fr":"","en":"The file shows the sources of the estimate (lawyers' opinion, experience of comparable disputes, IAS 37, para. 38), the outcomes considered and the reason for choosing the method, together with any evidence after the year end taken into account. A profit target has no place in the justification.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The lawyers' written opinion on the outcomes and their probabilities","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Why the most likely outcome was adjusted","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The evidence after the year end that was examined","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The impact of the provision on management's bonus","es":""},"correct":false,"feedback":{"fr":"","en":"This in no way informs the best estimate of the obligation.","es":""}}],"id":"P3","dimension":"DOCUMENTATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000061","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"ENERGY","tested_point":"RISK_NO_DOUBLE_COUNT","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"pre-tax-and-risk"},"references":["IAS 37 §42","IAS 37 §43","IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"The consolidation manager of Kerlance Énergie, a fictitious group, explains how he measured the provision for restoring a site. Spot the incorrect statements.","es":""},"explanation":{"fr":"","en":"Risks and uncertainties are taken into account in reaching the best estimate (IAS 37, para. 42); a risk adjustment may increase the liability, but uncertainty justifies neither excessive provisions nor deliberate overstatement, and duplicate adjustments for risk must be avoided (IAS 37, para. 43). The discount rate does not reflect risks already taken into account in the cash flows (IAS 37, para. 47).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"I took the variability of the possible costs into account in setting the best estimate.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"I added a 20% safety margin to the most pessimistic scenario, to be on the safe side.","es":""},"erroneous":true,"correction":{"fr":"","en":"Uncertainty justifies neither excessive provisions nor deliberate overstatement of the liability.","es":""}},{"id":"S3","text":{"fr":"","en":"My cash flows already include a mark-up for the risk of overrun; I also lowered the discount rate to reflect the same risk.","es":""},"erroneous":true,"correction":{"fr":"","en":"This is double counting: risk already included in the cash flows must not be reflected a second time in the rate.","es":""}},{"id":"S4","text":{"fr":"","en":"A risk adjustment may increase the amount of the liability.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000062","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"PROFESSIONAL_JUDGMENT","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"RISK_NO_DOUBLE_COUNT","difficulty":"ADVANCED","estimated_time_s":120,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"pre-tax-and-risk"},"references":["IAS 37 §42","IAS 37 §43"],"exercise":{"prompt":{"fr":"","en":"Which practices for measuring a provision comply with IAS 37?","es":""},"explanation":{"fr":"","en":"Risks and uncertainties are taken into account (IAS 37, para. 42), once only, and estimating an unfavourable scenario cautiously does not make it more probable than it is; uncertainty does not justify excessive provisions (IAS 37, para. 43).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Including the uncertainty about costs in the estimate, once only","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Estimating the cost of an unfavourable scenario cautiously, while leaving it at its actual probability","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Setting up a \"general risks\" provision to absorb future bad surprises","es":""},"correct":false,"feedback":{"fr":"","en":"Without an identified present obligation, no provision; uncertainty does not justify excessive provisions.","es":""}},{"id":"D","text":{"fr":"","en":"Treating the unfavourable scenario as the most likely one, out of prudence","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not allow the probability of a scenario to be altered.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000063","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"ESTIMATE_SOURCES","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"sources"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"What does the entity rely on to estimate the outcomes and financial effects of a provision?","es":""},"explanation":{"fr":"","en":"Estimates are determined by management's judgement, supplemented by experience of similar transactions and, in some cases, reports from independent experts; evidence provided by events after the reporting period is taken into account (IAS 37, para. 38).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Management's judgement","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Experience of similar transactions","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Reports from independent experts, where relevant","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Evidence provided by events after the reporting period","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"The profit target set by the board","es":""},"correct":false,"feedback":{"fr":"","en":"A profit target is not a source for estimating the obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000064","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"APPLICATION","format":"FILL_BLANK","context":"GENERIC","tested_point":"METHOD_BY_SITUATION","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000006","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"how"},"references":["IAS 37 §39","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Choose, for each situation, how to approach the estimate.","es":""},"explanation":{"fr":"","en":"Large population: expected value; continuous range of equally likely outcomes: mid-point of the range (IAS 37, para. 39). Single obligation: the most likely outcome is a starting point, adjusted if the other outcomes are mostly higher or lower (IAS 37, para. 40).","es":""},"common_error":{"fr":"","en":"Applying the expected value to the single lawsuit or the most likely outcome to the warranties: the method depends on the population and the shape of outcomes.","es":""},"format":"FILL_BLANK","text":{"fr":"","en":"Warranties on 30,000 lawnmowers sold: {{a}}. Cost of repairing a dyke, equally likely between two bounds: {{b}}. Single lawsuit with a competitor: {{c}}, to be adjusted according to the other outcomes.","es":""},"blanks":[{"id":"a","mode":"CHOICE","choices":[{"id":"EV","text":{"fr":"","en":"expected value","es":""}},{"id":"MID","text":{"fr":"","en":"mid-point of the range","es":""}},{"id":"ML","text":{"fr":"","en":"most likely outcome","es":""}}],"answer":"EV"},{"id":"b","mode":"CHOICE","choices":[{"id":"EV","text":{"fr":"","en":"expected value","es":""}},{"id":"MID","text":{"fr":"","en":"mid-point of the range","es":""}},{"id":"ML","text":{"fr":"","en":"most likely outcome","es":""}}],"answer":"MID"},{"id":"c","mode":"CHOICE","choices":[{"id":"EV","text":{"fr":"","en":"expected value","es":""}},{"id":"MID","text":{"fr":"","en":"mid-point of the range","es":""}},{"id":"ML","text":{"fr":"","en":"most likely outcome","es":""}}],"answer":"ML"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000065","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"CALCULATION","format":"CALCULATION","context":"CHEMICALS","tested_point":"PRESENT_VALUE_CALC","difficulty":"INTERMEDIATE","estimated_time_s":180,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45","IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Iberis, a fictitious chemicals company, must clean up land it has contaminated; the works, planned for the end of N+3, will cost 843,648 (best estimate). The effect of discounting is material; pre-tax rate used: 4% (case data). Calculate the provision.","es":""},"explanation":{"fr":"","en":"Where the effect of the time value of money is material, the provision is the present value of the expected expenditure (IAS 37, para. 45), using a pre-tax rate (IAS 37, para. 47): 843,648 / 1.04³ = 843,648 / 1.124864 = 750,000. The effect of discounting is 93,648. The rate is case data.","es":""},"common_error":{"fr":"","en":"Discounting over two years instead of three, or not discounting although the effect is material.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Expected expenditure at end of N+3","es":""},"value":"843648","unit":"EUR"},{"label":{"fr":"","en":"Pre-tax discount rate","es":""},"value":"4","unit":"PERCENT"},{"label":{"fr":"","en":"Time to settlement","es":""},"value":"3","unit":"YEARS"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":750000,"tolerance":1,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Effect of discounting","es":""},"answer":93648,"tolerance":1,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Provision at 31 December N","es":""},"expression":"a / (1 + b)^3","variables":[{"symbol":"a","meaning":{"fr":"","en":"Expected expenditure at end of N+3","es":""},"value":843648,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Pre-tax discount rate","es":""},"value":4,"unit":"PERCENT"}],"result":750000,"unit":"EUR","rationale":{"fr":"","en":"Where the effect of the time value of money is material, the provision is the present value of the expected expenditure (IAS 37, para. 45), using a pre-tax rate (IAS 37, para. 47): 843,648 / 1.04³ = 843,648 / 1.124864 = 750,000.","es":""}}],"references":["REF.IAS37.45","REF.IAS37.47"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000066","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"CALCULATION","format":"CALCULATION","context":"TELECOM","tested_point":"PRESENT_VALUE_CALC","difficulty":"INTERMEDIATE","estimated_time_s":180,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"numeric-example"},"references":["IAS 37 §45"],"exercise":{"prompt":{"fr":"","en":"On 1 January N, Yselia, a fictitious telecom tower operator, completes a tower on leased land; the lease requires it to dismantle the tower and restore the ground in 25 years, at an estimated cost of 2,000,000. Pre-tax rate used: 5% (case data). Calculate the provision at 1 January N (rounded to the euro).","es":""},"explanation":{"fr":"","en":"Present value: 2,000,000 / 1.05²⁵ = 2,000,000 / 3.386355 ≈ 590,606 (IAS 37, para. 45). Over 25 years, the effect of discounting is clearly material. The rate is case data.","es":""},"common_error":{"fr":"","en":"Providing for the nominal 2,000,000: over 25 years the effect of discounting is material and the provision is the present value.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Expected cost in 25 years","es":""},"value":"2000000","unit":"EUR"},{"label":{"fr":"","en":"Pre-tax discount rate","es":""},"value":"5","unit":"PERCENT"},{"label":{"fr":"","en":"Term","es":""},"value":"25","unit":"YEARS"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 1 January N","es":""},"answer":590606,"tolerance":1,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000067","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"GENERIC","tested_point":"DISCOUNT_RATE_CHOICE","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discount-rate"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"Which rate should be used to discount a provision whose cash flows include no adjustment for risk?","es":""},"explanation":{"fr":"","en":"The rate is pre-tax and reflects current market assessments of the time value of money and the risks specific to the liability, without including risks already reflected in the cash flows (IAS 37, para. 47). Here, the cash flows include no risk: the rate therefore reflects the risks specific to the liability.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A pre-tax rate reflecting current market conditions and the risks specific to the liability","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The entity's post-tax weighted average cost of capital","es":""},"correct":false,"feedback":{"fr":"","en":"The rate must be pre-tax and specific to the liability, not an overall cost of capital.","es":""}},{"id":"C","text":{"fr":"","en":"The borrowing rate the entity obtained ten years ago","es":""},"correct":false,"feedback":{"fr":"","en":"The rate reflects current market assessments, not a historical rate.","es":""}},{"id":"D","text":{"fr":"","en":"A zero rate, out of prudence","es":""},"correct":false,"feedback":{"fr":"","en":"When the effect is material, the provision is discounted; prudence does not justify overstating the liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000068","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"MINING","tested_point":"DISCOUNT_RATE_CHOICE","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discount-rate"},"references":["IAS 37 §47","IAS 37 §45","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Review the memo of Gildas, a fictitious mining operator, on discounting its rehabilitation provision.","es":""},"explanation":{"fr":"","en":"A pre-tax rate reflecting current market assessments and the risks specific to the liability not already included in the cash flows (IAS 37, para. 47); discounting when the effect is material (IAS 37, para. 45); measurement before tax (IAS 37, para. 41).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"We discount, because the works will only take place in fifteen years and the effect is material.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"We use the post-tax rate on our issued bonds, adjusted for our tax rate.","es":""},"erroneous":true,"correction":{"fr":"","en":"The discount rate for a provision is a pre-tax rate.","es":""}},{"id":"S3","text":{"fr":"","en":"We keep the rate used originally, six years ago, to ensure comparability.","es":""},"erroneous":true,"correction":{"fr":"","en":"The rate reflects current market assessments at each year end.","es":""}},{"id":"S4","text":{"fr":"","en":"As our cash flows are already increased for the risk of overrun, the rate does not include that risk again.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000069","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"TELECOM","tested_point":"RECORD_DISCOUNTED_PROVISION","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"entry"},"references":["IAS 37 §8","IAS 37 §45"],"exercise":{"prompt":{"fr":"","en":"Take Yselia's tower again: decommissioning provision of 590,606 at 1 January N. Case data: the IAS 16 criteria for including this initial estimate of the decommissioning cost in the cost of the tower are met (see the IAS 16 course). Record the entry at 1 January N.","es":""},"explanation":{"fr":"","en":"IAS 37 neither requires nor prohibits the capitalisation of the costs recognised when a provision is made: other standards decide (IAS 37, para. 8). Including the initial decommissioning cost in the cost of the tower comes from IAS 16, whose criteria are met according to the case data (IAS 16 interaction): debit Property, plant and equipment 590,606, credit Decommissioning provision 590,606, at present value (IAS 37, para. 45).","es":""},"common_error":{"fr":"","en":"Expensing immediately a cost included in the cost of the asset under IAS 16 (criteria met according to the case data), or using the undiscounted amount.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}},{"id":"DECOMMISSIONING_PROVISION","text":{"fr":"","en":"Decommissioning provision","es":""}},{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"FINANCE_COST","text":{"fr":"","en":"Finance costs","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"PPE","side":"DEBIT","amount":590606},{"id":"L2","account":"DECOMMISSIONING_PROVISION","side":"CREDIT","amount":590606}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000070","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"AGRICULTURE","tested_point":"RECORD_DISCOUNTED_PROVISION","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"entry"},"references":["IAS 37 §45","IAS 37 §8"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Bellegrain, a fictitious sugar refinery, must, under its operating permit, dredge ponds polluted by its past discharges: 351,520 expected at the end of N+3, pre-tax rate 4% (case data). Case assumption: no standard provides for this cost to be recognised as an asset. Record the entry.","es":""},"explanation":{"fr":"","en":"Provision at present value: 351,520 / 1.04³ = 312,500 (IAS 37, para. 45). As the pollution has already been caused by operations and no asset is recognised (case assumption, IAS 37, para. 8), the other side is an expense: debit Provision expense, credit Restoration provision.","es":""},"common_error":{"fr":"","en":"Providing 351,520 without discounting, or capitalising the cost: under the case, the present value is expensed.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"RESTORATION_PROVISION","text":{"fr":"","en":"Restoration provision","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}},{"id":"FINANCE_COST","text":{"fr":"","en":"Finance costs","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":312500},{"id":"L2","account":"RESTORATION_PROVISION","side":"CREDIT","amount":312500}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000071","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"DISCOUNT_WHEN_SIGNIFICANT","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Every provision must be discounted, even when it will be settled within a few months.","es":""},"explanation":{"fr":"","en":"False. The provision is discounted when the effect of the time value of money is material (IAS 37, paras. 45 and 46); for a near-term outflow, this effect is generally not material.","es":""},"common_error":{"fr":"","en":"Always discounting: it is only done when the effect of the time value of money is material.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000072","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"APPLICATION","format":"MINI_CASE","context":"WASTE_MANAGEMENT","tested_point":"DISCOUNTED_PROVISION_MINI_CASE","difficulty":"ADVANCED","estimated_time_s":600,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"how"},"references":["IAS 37 §45","IAS 37 §47","IAS 37 §8"],"exercise":{"prompt":{"fr":"","en":"Measure and record Marbrane's provision at 31 December N.","es":""},"explanation":{"fr":"","en":"The provision is the present value of the expected expenditure when the effect is material (IAS 37, para. 45), using a pre-tax rate reflecting current market conditions and the risks specific to the liability, without double counting (IAS 37, para. 47). IAS 37 does not decide on capitalisation (IAS 37, para. 8): the other side here follows from the case data.","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Marbrane, a fictitious landfill operator, filled the last authorised cell in N. Its permit requires it to cap the filled cells and make them permanently watertight in 8 years.","es":""},"exhibits":[{"title":{"fr":"","en":"Data at 31 December N (case data)","es":""},"body":{"fr":"","en":"- Expected capping cost in 8 years, without any risk mark-up: 1,200,000.\n- 8-year pre-tax risk-free rate: 3.0%; pre-tax rate also reflecting the risks specific to the liability: 3.5%; post-tax weighted average cost of capital: 7.2%.\n- The costs result from the damage caused by filling; no asset is recognised for them (case assumption).","es":""}}],"parts":[{"prompt":{"fr":"","en":"Which rate should be used?","es":""},"explanation":{"fr":"","en":"The cash flows include no risk adjustment: the pre-tax rate that also reflects the risks specific to the liability, 3.5%, is appropriate (IAS 37, para. 47). The post-tax cost of capital is not appropriate.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"3.5%","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"3.0%","es":""},"correct":false,"feedback":{"fr":"","en":"As the cash flows are not risk-adjusted, the rate must reflect the risks specific to the liability.","es":""}},{"id":"C","text":{"fr":"","en":"7.2%","es":""},"correct":false,"feedback":{"fr":"","en":"A post-tax cost of capital is neither pre-tax nor specific to the liability.","es":""}}],"id":"P1","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"Calculate the provision at 31 December N (rounded to the euro).","es":""},"explanation":{"fr":"","en":"1,200,000 / 1.035⁸ = 1,200,000 / 1.316809 ≈ 911,294 (IAS 37, para. 45).","es":""},"common_error":{"fr":"","en":"Dividing by (1 + rate) only once or multiplying by the factor: divide by 1.035 to the power of 8.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Expected cost in 8 years","es":""},"value":"1200000","unit":"EUR"},{"label":{"fr":"","en":"Rate used","es":""},"value":"3.5","unit":"PERCENT"},{"label":{"fr":"","en":"Term","es":""},"value":"8","unit":"YEARS"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":911294,"tolerance":1,"unit":"EUR"}],"id":"P2","dimension":"CALCULATION"},{"prompt":{"fr":"","en":"Record the entry.","es":""},"explanation":{"fr":"","en":"As no asset is recognised (case assumption, IAS 37, para. 8): debit Provision expense 911,294, credit Restoration provision 911,294.","es":""},"common_error":{"fr":"","en":"Capitalising the cost although the case excludes it: the other side of the provision is an expense.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"RESTORATION_PROVISION","text":{"fr":"","en":"Restoration provision","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}},{"id":"FINANCE_COST","text":{"fr":"","en":"Finance costs","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":911294},{"id":"L2","account":"RESTORATION_PROVISION","side":"CREDIT","amount":911294}],"id":"P3","dimension":"JOURNAL_ENTRY"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000073","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"GENERIC","tested_point":"CAPITALISATION_OTHER_STANDARDS","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"entry"},"references":["IAS 37 §8"],"exercise":{"prompt":{"fr":"","en":"What does IAS 37 say about the other side of a provision when it is recognised?","es":""},"explanation":{"fr":"","en":"Other standards determine whether expenditure is treated as an asset or as an expense; IAS 37 neither prohibits nor requires capitalisation of the costs recognised when a provision is made (IAS 37, para. 8).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It neither requires nor prohibits capitalisation: other standards decide","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The other side is always an expense","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 does not require this; another standard may require recognition as an asset.","es":""}},{"id":"C","text":{"fr":"","en":"The other side is always an asset","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 does not require capitalisation either.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000074","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"INDUSTRIAL","tested_point":"NO_DISPOSAL_GAINS","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"disposal-gains"},"references":["IAS 37 §51","IAS 37 §52"],"exercise":{"prompt":{"fr":"","en":"A plant must be cleaned up before being sold; the gain expected on the sale of the land may be deducted from the clean-up provision, as the two operations are linked.","es":""},"explanation":{"fr":"","en":"False. Gains from the expected disposal of assets are not taken into account in measuring a provision (IAS 37, para. 51), even if the disposal is closely linked to the event giving rise to the provision; they are recognised at the time specified by the standard dealing with the assets concerned (IAS 37, para. 52).","es":""},"common_error":{"fr":"","en":"Deducting the gain on selling the land from the provision: expected disposal gains are not taken into account.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000075","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"CALCULATION","format":"CALCULATION","context":"REAL_ESTATE","tested_point":"NO_DISPOSAL_GAINS","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"disposal-gains"},"references":["IAS 37 §51","IAS 37 §52"],"exercise":{"prompt":{"fr":"","en":"Valtrès, a fictitious logistics company, must clean up a contaminated warehouse: 800,000 (best estimate, discounting not material). After the clean-up, it plans to sell the land at an estimated gain of 300,000. Calculate the amounts at 31 December N.","es":""},"explanation":{"fr":"","en":"The provision does not take account of expected disposal gains: 800,000 (IAS 37, para. 51). The gain of 300,000 will be recognised on sale, under the standard dealing with the land (IAS 37, para. 52); no amount is recognised for it at 31 December N.","es":""},"common_error":{"fr":"","en":"Providing the net amount of 500,000.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Clean-up cost","es":""},"value":"800000","unit":"EUR"},{"label":{"fr":"","en":"Expected gain on sale of the land","es":""},"value":"300000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":800000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Disposal gain recognised at 31 December N","es":""},"answer":0,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000076","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"ENERGY","tested_point":"FUTURE_EVENTS_OBJECTIVE_EVIDENCE","difficulty":"ADVANCED","estimated_time_s":120,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48","IAS 37 §49"],"exercise":{"prompt":{"fr":"","en":"To dismantle its wind turbines in 15 years, Silvane Vent, a fictitious operator, estimates the cost at 900,000 using current techniques. Two possible reductions exist: (1) experience built up by dismantling contractors with these same techniques, documented by independent studies, should reduce the cost by 10%; (2) a blade recycling process, still at laboratory stage, could reduce it by 35%. What should be reflected in the provision?","es":""},"explanation":{"fr":"","en":"Future events are reflected where there is sufficient objective evidence that they will occur (IAS 37, para. 48). Cost reductions from experience with existing technology can be included; an entirely new technology is anticipated only if supported by sufficient objective evidence (IAS 37, para. 49), which is not the case for a laboratory process.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The 10% reduction only","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Both reductions, to use the most realistic estimate","es":""},"correct":false,"feedback":{"fr":"","en":"The laboratory process is not supported by sufficient objective evidence.","es":""}},{"id":"C","text":{"fr":"","en":"No reduction: the current cost must always be used","es":""},"correct":false,"feedback":{"fr":"","en":"Objectively supported reductions from experience with existing technology are taken into account.","es":""}},{"id":"D","text":{"fr":"","en":"The 35% reduction only, the most significant","es":""},"correct":false,"feedback":{"fr":"","en":"The size of a reduction does not replace objective evidence that it will happen.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000077","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"ANALYSIS","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"FUTURE_EVENTS_OBJECTIVE_EVIDENCE","difficulty":"ADVANCED","estimated_time_s":120,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48","IAS 37 §49","IAS 37 §50","IAS 37 §51"],"exercise":{"prompt":{"fr":"","en":"Which of these items are taken into account in measuring an existing restoration provision?","es":""},"explanation":{"fr":"","en":"Future events supported by sufficient objective evidence are reflected (IAS 37, para. 48), including cost reductions from experience with existing technology (IAS 37, para. 49) and new legislation that is virtually certain to be enacted, with known content (IAS 37, para. 50). An unsupported technology, a bill with uncertain content and a disposal gain (IAS 37, para. 51) are not.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A cost reduction due to experience with the existing technique, supported by studies","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A stricter law, passed, whose entry into force is virtually certain and whose content is known","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A technology promised by a start-up, without any conclusive trial","es":""},"correct":false,"feedback":{"fr":"","en":"No sufficient objective evidence: it is not anticipated.","es":""}},{"id":"D","text":{"fr":"","en":"A bill whose content is still being debated","es":""},"correct":false,"feedback":{"fr":"","en":"Evidence is needed both of what the law will require and that its enactment is virtually certain.","es":""}},{"id":"E","text":{"fr":"","en":"The gain expected on selling the restored site","es":""},"correct":false,"feedback":{"fr":"","en":"Expected disposal gains are never taken into account in measuring a provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000078","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"CALCULATION","format":"CALCULATION","context":"CHEMICALS","tested_point":"FUTURE_EVENTS_OBJECTIVE_EVIDENCE","difficulty":"ADVANCED","estimated_time_s":210,"lesson_id":"LS.IAS37.000007","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"numeric-example"},"references":["IAS 37 §48","IAS 37 §49","IAS 37 §51"],"exercise":{"prompt":{"fr":"","en":"Doralys, a fictitious chemicals company, must treat polluted soil in two years. Cost with current techniques: 1,400,000. Independent engineers document a 15% reduction due to contractors' experience with these techniques. An experimental enzyme process promises −40%, without any conclusive trial. Doralys then plans to sell the land at a gain of 250,000. Discounting not material (case data). Calculate.","es":""},"explanation":{"fr":"","en":"Supported reduction included (IAS 37, paras. 48 and 49): 1,400,000 × 85% = 1,190,000. The experimental process is not anticipated (IAS 37, para. 49); the disposal gain is not deducted (IAS 37, para. 51). Provision: 1,190,000.","es":""},"common_error":{"fr":"","en":"Combining both reductions and deducting the disposal gain.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Cost with current techniques","es":""},"value":"1400000","unit":"EUR"},{"label":{"fr":"","en":"Documented reduction (experience)","es":""},"value":"15","unit":"PERCENT"},{"label":{"fr":"","en":"Promised reduction (experimental process)","es":""},"value":"40","unit":"PERCENT"},{"label":{"fr":"","en":"Expected gain on sale of the land","es":""},"value":"250000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision at 31 December N","es":""},"answer":1190000,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000079","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"REIMBURSEMENT_VIRTUALLY_CERTAIN","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53"],"exercise":{"prompt":{"fr":"","en":"An entity that has provided for a dispute recognises a receivable from its insurer as soon as reimbursement is probable.","es":""},"explanation":{"fr":"","en":"False. The reimbursement is recognised only when it is virtually certain to be received if the entity settles the obligation (IAS 37, para. 53).","es":""},"common_error":{"fr":"","en":"Applying the \"probable\" threshold for provisions to the reimbursement.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000080","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"GENERIC","tested_point":"REIMBURSEMENT_SEPARATE_ASSET","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"net-presentation"},"references":["IAS 37 §53","IAS 37 §54"],"exercise":{"prompt":{"fr":"","en":"A provision of 400,000 is covered up to 250,000 by a virtually certain reimbursement. Which presentation complies?","es":""},"explanation":{"fr":"","en":"The reimbursement is a separate asset (IAS 37, para. 53): balance sheet with a provision of 400,000 and an asset of 250,000. In the statement presenting profit or loss, the expense may be presented net of the reimbursement, i.e. 150,000 (IAS 37, para. 54).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Balance sheet: provision 400,000 and asset 250,000; profit or loss: a net expense of 150,000 is permitted","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Balance sheet: net provision of 150,000","es":""},"correct":false,"feedback":{"fr":"","en":"Offsetting is permitted only in profit or loss; in the balance sheet, the asset is separate from the provision.","es":""}},{"id":"C","text":{"fr":"","en":"Balance sheet: provision 400,000, no asset until the insurer has paid","es":""},"correct":false,"feedback":{"fr":"","en":"A virtually certain reimbursement is recognised without waiting for payment.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000081","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"CALCULATION","format":"CALCULATION","context":"MANUFACTURING","tested_point":"REIMBURSEMENT_CAP","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"separate-asset-and-cap"},"references":["IAS 37 §53","IAS 37 §54"],"exercise":{"prompt":{"fr":"","en":"Auxiva Mobilier, a fictitious manufacturer, has provided 350,000 to compensate customers injured by a defective chair. Its insurer has confirmed in writing that it will cover the claim up to 420,000; it is solvent and reimbursement is virtually certain. Calculate.","es":""},"explanation":{"fr":"","en":"The reimbursement asset cannot exceed the amount of the provision (IAS 37, para. 53): 350,000, not 420,000. Net expense that may be presented: 350,000 − 350,000 = 0 (IAS 37, para. 54).","es":""},"common_error":{"fr":"","en":"Recognising the full amount of insurance cover.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Provision","es":""},"value":"350000","unit":"EUR"},{"label":{"fr":"","en":"Cover confirmed by the insurer","es":""},"value":"420000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Reimbursement asset","es":""},"answer":350000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Net expense that may be presented","es":""},"answer":0,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000082","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"CALCULATION","format":"CALCULATION","context":"HOSPITALITY","tested_point":"REIMBURSEMENT_SEPARATE_ASSET","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"separate-asset-and-cap"},"references":["IAS 37 §53","IAS 37 §54","IAS 37 §56"],"exercise":{"prompt":{"fr":"","en":"A fictitious leisure park, Tirelis, has provided 260,000 following an accident on a ride; it remains liable for the whole amount to the victims. Its insurer has agreed in writing to reimburse 180,000 (virtually certain). Calculate the amounts at 31 December N.","es":""},"explanation":{"fr":"","en":"As Tirelis remains liable for the whole amount, the provision covers the total, 260,000, and the reimbursement is a separate asset of 180,000 (IAS 37, paras. 56 and 53). The expense may be presented net: 80,000 (IAS 37, para. 54).","es":""},"common_error":{"fr":"","en":"Providing only the net 80,000: the provision stays gross and the reimbursement is a separate asset; only the expense may be shown net.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Total obligation to the victims","es":""},"value":"260000","unit":"EUR"},{"label":{"fr":"","en":"Reimbursement confirmed by the insurer","es":""},"value":"180000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision in the balance sheet","es":""},"answer":260000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Reimbursement asset","es":""},"answer":180000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Net expense that may be presented","es":""},"answer":80000,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000083","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"HOSPITALITY","tested_point":"RECORD_REIMBURSEMENT","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"entry"},"references":["IAS 37 §53","IAS 37 §56"],"exercise":{"prompt":{"fr":"","en":"Take Tirelis again: provision of 260,000 and virtually certain reimbursement of 180,000. Record the entries at 31 December N (gross provision and separate asset).","es":""},"explanation":{"fr":"","en":"Gross provision: debit Provision expense 260,000, credit Provision for litigation 260,000; reimbursement: debit Reimbursement receivable 180,000, credit Reimbursement income 180,000 (IAS 37, paras. 53 and 56). No offsetting in the balance sheet.","es":""},"common_error":{"fr":"","en":"Recognising only the net provision of 80,000.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"LITIGATION_PROVISION","text":{"fr":"","en":"Provision for litigation","es":""}},{"id":"REIMBURSEMENT_RECEIVABLE","text":{"fr":"","en":"Reimbursement receivable","es":""}},{"id":"REIMBURSEMENT_INCOME","text":{"fr":"","en":"Reimbursement income","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":260000},{"id":"L2","account":"LITIGATION_PROVISION","side":"CREDIT","amount":260000},{"id":"L3","account":"REIMBURSEMENT_RECEIVABLE","side":"DEBIT","amount":180000},{"id":"L4","account":"REIMBURSEMENT_INCOME","side":"CREDIT","amount":180000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000084","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"ANALYSIS","format":"SINGLE_CHOICE","context":"ELECTRONICS","tested_point":"NOT_LIABLE_EXCLUDED","difficulty":"ADVANCED","estimated_time_s":90,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"not-liable"},"references":["IAS 37 §56","IAS 37 §57"],"exercise":{"prompt":{"fr":"","en":"To recall defective chargers, Rossane, a fictitious distributor, estimates the total cost at 150,000. The contract with its supplier provides that the supplier pays customers directly for the replacement chargers (90,000); Rossane has no obligation to customers for that part if the supplier does not pay. What provision?","es":""},"explanation":{"fr":"","en":"When the entity is not liable for the costs if the third party fails to pay, it has no liability for those costs, which are excluded from the provision (IAS 37, para. 57): 150,000 − 90,000 = 60,000. If Rossane remained liable, it would provide for the whole amount and recognise a separate asset (IAS 37, para. 56).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provision of 60,000, with no reimbursement asset","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provision of 150,000 and reimbursement asset of 90,000","es":""},"correct":false,"feedback":{"fr":"","en":"This treatment applies where the entity remains liable for the whole; here it is not liable for the supplier's part.","es":""}},{"id":"C","text":{"fr":"","en":"Provision of 150,000, with no asset","es":""},"correct":false,"feedback":{"fr":"","en":"Rossane has no liability for the costs the supplier bears directly with no residual liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000085","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"APPLICATION","format":"MINI_CASE","context":"AUTOMOTIVE","tested_point":"REIMBURSEMENT_MINI_CASE","difficulty":"EXPERT","estimated_time_s":660,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"how"},"references":["IAS 37 §53","IAS 37 §54","IAS 37 §56","IAS 37 §57"],"exercise":{"prompt":{"fr":"","en":"Account for Wendril's recall at 31 December N.","es":""},"explanation":{"fr":"","en":"Distinguish what the entity is liable for (gross provision, IAS 37, para. 56) from what it is not (excluded, IAS 37, para. 57); reimbursement is recognised only when virtually certain, as a separate asset capped at the provision (IAS 37, para. 53); the expense may be presented net in profit or loss (IAS 37, para. 54).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Wendril, a fictitious automotive supplier, is recalling 4,000 defective brake units delivered in N. The recall is a present obligation; the outflow is probable.","es":""},"exhibits":[{"title":{"fr":"","en":"Costs and cover (case data)","es":""},"body":{"fr":"","en":"- Total cost of the recall: 500,000.\n- The sensor manufacturer pays the car makers directly for replacing the sensors, 120,000; under the contract, Wendril is not liable for these costs if it fails to pay.\n- For the rest, Wendril is liable to the car makers. Its liability insurer has confirmed in writing that it will cover 200,000; it is solvent.\n- Wendril hopes to obtain 50,000 from a second insurer, which disputes the cover.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Calculate the amounts at 31 December N.","es":""},"explanation":{"fr":"","en":"Provision: 500,000 − 120,000 (not owed by Wendril, IAS 37, para. 57) = 380,000. Asset: 200,000 (virtually certain); the disputed 50,000 is not recognised (IAS 37, para. 53). Net expense that may be presented: 180,000 (IAS 37, para. 54).","es":""},"common_error":{"fr":"","en":"Including the part paid directly by the manufacturer in the provision, or recognising the 50,000 in dispute: neither is included.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Total cost of the recall","es":""},"value":"500000","unit":"EUR"},{"label":{"fr":"","en":"Paid directly by the sensor manufacturer","es":""},"value":"120000","unit":"EUR"},{"label":{"fr":"","en":"Cover confirmed (first insurer)","es":""},"value":"200000","unit":"EUR"},{"label":{"fr":"","en":"Disputed amount (second insurer)","es":""},"value":"50000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Provision","es":""},"answer":380000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Reimbursement asset","es":""},"answer":200000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Net expense that may be presented","es":""},"answer":180000,"tolerance":0,"unit":"EUR"}],"id":"P1","dimension":"CALCULATION"},{"prompt":{"fr":"","en":"Record the entries.","es":""},"explanation":{"fr":"","en":"Debit Provision expense 380,000 / credit Provision 380,000; debit Reimbursement receivable 200,000 / credit Reimbursement income 200,000 (IAS 37, paras. 53 and 56).","es":""},"common_error":{"fr":"","en":"Offsetting the reimbursement receivable against the provision: these are two separate entries, a liability and an asset.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"PROVISION","text":{"fr":"","en":"Provision","es":""}},{"id":"REIMBURSEMENT_RECEIVABLE","text":{"fr":"","en":"Reimbursement receivable","es":""}},{"id":"REIMBURSEMENT_INCOME","text":{"fr":"","en":"Reimbursement income","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"PROVISION_EXPENSE","side":"DEBIT","amount":380000},{"id":"L2","account":"PROVISION","side":"CREDIT","amount":380000},{"id":"L3","account":"REIMBURSEMENT_RECEIVABLE","side":"DEBIT","amount":200000},{"id":"L4","account":"REIMBURSEMENT_INCOME","side":"CREDIT","amount":200000}],"id":"P2","dimension":"JOURNAL_ENTRY"},{"prompt":{"fr":"","en":"Wendril may present a net provision of 180,000 in the balance sheet.","es":""},"explanation":{"fr":"","en":"False. The reimbursement is a separate asset (IAS 37, para. 53); only the expense may be presented net, in the statement presenting profit or loss (IAS 37, para. 54).","es":""},"common_error":{"fr":"","en":"Presenting a net provision in the balance sheet: the reimbursement is a separate asset; only the expense may be shown net.","es":""},"format":"TRUE_FALSE","answer":false,"id":"P3","dimension":"ANALYSIS"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000086","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"CONSTRUCTION","tested_point":"REIMBURSEMENT_SEPARATE_ASSET","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000008","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"pitfalls"},"references":["IAS 37 §53","IAS 37 §54","IAS 37 §55"],"exercise":{"prompt":{"fr":"","en":"A defects provision of 500,000 appears in the accounts of Calistre, a fictitious construction company. Spot the errors in its treasurer's memo on the insurance.","es":""},"explanation":{"fr":"","en":"Reimbursement by a third party (insurance, warranty, indemnity, IAS 37, para. 55) is recognised only if virtually certain, as a separate asset capped at the amount of the provision (IAS 37, para. 53); only the expense may be presented net (IAS 37, para. 54).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"The insurer has confirmed in writing that it will cover 600,000; we therefore recognise a receivable of 600,000.","es":""},"erroneous":true,"correction":{"fr":"","en":"The asset cannot exceed the amount of the provision: 500,000.","es":""}},{"id":"S2","text":{"fr":"","en":"We present the provision in the balance sheet net of the insurance receivable.","es":""},"erroneous":true,"correction":{"fr":"","en":"In the balance sheet, the receivable is a separate asset; no offsetting against the provision.","es":""}},{"id":"S3","text":{"fr":"","en":"In profit or loss, we present the expense net of the reimbursement income.","es":""},"erroneous":false},{"id":"S4","text":{"fr":"","en":"The subcontractor's warranty, which it disputes, is not recognised.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000087","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"REVIEW_EACH_DATE","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"A provision is reviewed only when a new event justifies it; otherwise it remains unchanged until it is used.","es":""},"explanation":{"fr":"","en":"False. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate; if an outflow is no longer probable, the provision is reversed (IAS 37, para. 59).","es":""},"common_error":{"fr":"","en":"Leaving a provision unchanged without a new event: it is reviewed at each reporting date and adjusted to the current best estimate.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000088","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"PHARMA","tested_point":"REVIEW_EACH_DATE","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"At 31 December N, Ismara, a fictitious laboratory, had provided 120,000 for a claim by a distributor. In November N+1, the distributor withdraws the claim permanently, without consideration. What should be done at 31 December N+1?","es":""},"explanation":{"fr":"","en":"As an outflow is no longer probable, the provision is reversed (IAS 37, para. 59): the reversal of 120,000 is recognised in N+1, without restating N.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Reverse the provision of 120,000 in N+1","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Keep it to cover any other disputes","es":""},"correct":false,"feedback":{"fr":"","en":"A provision only covers the obligation for which it was set up; without a probable outflow, it is reversed.","es":""}},{"id":"C","text":{"fr":"","en":"Correct the N financial statements","es":""},"correct":false,"feedback":{"fr":"","en":"The withdrawal is an N+1 event; the N estimate was not an error.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000089","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","format":"CALCULATION","context":"CHEMICALS","tested_point":"UNWINDING_CALC","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"unwinding"},"references":["IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"Iberis case continued: the discounted clean-up provision amounts to 750,000 at 1 January N+1; rate unchanged at 4%, no revision of cash flows. Calculate the unwinding for N+1 and the provision at 31 December N+1.","es":""},"explanation":{"fr":"","en":"The carrying amount of a discounted provision increases in each period to reflect the passage of time, and this increase is a borrowing cost (IAS 37, para. 60): 750,000 × 4% = 30,000; provision: 780,000. Check: 843,648 / 1.04² = 780,000.","es":""},"common_error":{"fr":"","en":"Leaving the provision at 750,000 or booking the unwinding as an operating charge: it increases with time, and that increase is a borrowing cost.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":"750000","unit":"EUR"},{"label":{"fr":"","en":"Discount rate","es":""},"value":"4","unit":"PERCENT"}],"steps":[{"id":"S1","label":{"fr":"","en":"Unwinding for N+1","es":""},"answer":30000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Provision at 31 December N+1","es":""},"answer":780000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Unwinding for N+1","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":750000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Discount rate","es":""},"value":4,"unit":"PERCENT"}],"result":30000,"unit":"EUR","rationale":{"fr":"","en":"The carrying amount of a discounted provision increases in each period to reflect the passage of time, and this increase is a borrowing cost (IAS 37, para. 60): 750,000 × 4% = 30,000","es":""}}],"references":["REF.IAS37.60"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000090","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","format":"CALCULATION","context":"MINING","tested_point":"UNWINDING_AND_REVISION","difficulty":"ADVANCED","estimated_time_s":270,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"numeric-example"},"references":["IAS 37 §59","IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"At 1 January N+1, Quirena, a fictitious quarry operator, carries a restoration provision of 500,000: the present value, at 6%, of expenditure of 595,508 expected at the end of N+3. At 31 December N+1, a new quote puts the expected expenditure at the end of N+3 at 650,000; the rate remains 6%. Calculate (rounded to the euro).","es":""},"explanation":{"fr":"","en":"Unwinding: 500,000 × 6% = 30,000 → 530,000 (IAS 37, para. 60). New best estimate at 31 December N+1: 650,000 / 1.06² = 578,498 (IAS 37, para. 59). Revision: 578,498 − 530,000 = 48,498. The two movements are separate: one reflects time, the other the new estimate.","es":""},"common_error":{"fr":"","en":"Discounting the new quote over three years, or confusing revision with unwinding.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":"500000","unit":"EUR"},{"label":{"fr":"","en":"Rate","es":""},"value":"6","unit":"PERCENT"},{"label":{"fr":"","en":"New expected expenditure at end of N+3","es":""},"value":"650000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Unwinding for N+1","es":""},"answer":30000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Provision at 31 December N+1 after revision","es":""},"answer":578498,"tolerance":1,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Effect of the revision","es":""},"answer":48498,"tolerance":1,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Unwinding for N+1","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":500000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Rate","es":""},"value":6,"unit":"PERCENT"}],"result":30000,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Provision at 31 December N+1 after revision","es":""},"expression":"a / (1 + b)^2","variables":[{"symbol":"a","meaning":{"fr":"","en":"New expected expenditure at end of N+3","es":""},"value":650000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Rate","es":""},"value":6,"unit":"PERCENT"}],"result":578498,"unit":"EUR"}],"references":["REF.IAS37.59","REF.IAS37.60"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000091","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"CHEMICALS","tested_point":"RECORD_UNWINDING","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"entry"},"references":["IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"Record the N+1 unwinding entry for Iberis's provision (30,000).","es":""},"explanation":{"fr":"","en":"The increase due to the passage of time is a borrowing cost (IAS 37, para. 60): debit Finance costs 30,000, credit Restoration provision 30,000.","es":""},"common_error":{"fr":"","en":"Debiting the operating provision expense instead of finance costs.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"FINANCE_COST","text":{"fr":"","en":"Finance costs","es":""}},{"id":"RESTORATION_PROVISION","text":{"fr":"","en":"Restoration provision","es":""}},{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"FINANCE_COST","side":"DEBIT","amount":30000},{"id":"L2","account":"RESTORATION_PROVISION","side":"CREDIT","amount":30000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000092","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"TRANSPORT","tested_point":"RECORD_USE_AND_REVERSAL","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"entry"},"references":["IAS 37 §59","IAS 37 §61"],"exercise":{"prompt":{"fr":"","en":"Elvira, a fictitious carrier, had provided 90,000 for a dispute with a customer. In June N+1, the dispute is closed by a settlement of 72,000, paid in cash. Record the entry.","es":""},"explanation":{"fr":"","en":"The provision is used for the expenditure for which it was set up (IAS 37, para. 61): 72,000; the balance of 18,000, no longer needed, is reversed (IAS 37, para. 59).","es":""},"common_error":{"fr":"","en":"Leaving 18,000 in the provision \"just in case\".","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"LITIGATION_PROVISION","text":{"fr":"","en":"Provision for litigation","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}},{"id":"PROVISION_REVERSAL","text":{"fr":"","en":"Provision expense (reversal)","es":""}},{"id":"PROVISION_EXPENSE","text":{"fr":"","en":"Provision expense","es":""}},{"id":"OTHER_INCOME","text":{"fr":"","en":"Other income","es":""}}],"lines":[{"id":"L1","account":"LITIGATION_PROVISION","side":"DEBIT","amount":90000},{"id":"L2","account":"CASH","side":"CREDIT","amount":72000,"given":["account"]},{"id":"L3","account":"PROVISION_REVERSAL","side":"CREDIT","amount":18000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000093","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"RETAIL","tested_point":"USE_FOR_ORIGINAL_PURPOSE","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"use-for-original-purpose"},"references":["IAS 37 §61","IAS 37 §62"],"exercise":{"prompt":{"fr":"","en":"The accountant of Gorvane, a fictitious DIY chain, proposes the following charges in N+1. Spot the incorrect ones.","es":""},"explanation":{"fr":"","en":"A provision is used only for the expenditures for which it was originally recognised (IAS 37, para. 61); charging other expenditure would conceal the impact of two different events (IAS 37, para. 62). Any excess no longer needed is reversed.","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"Warranty repairs on drills sold in N are charged against the warranty provision.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"The fine received for non-compliant price display is charged against the excess warranty provision.","es":""},"erroneous":true,"correction":{"fr":"","en":"The fine is an N+1 expense, unrelated to the provision; any excess warranty provision no longer needed is reversed.","es":""}},{"id":"S3","text":{"fr":"","en":"Legal fees for a new dispute with a landlord are charged against the provision for the employment dispute.","es":""},"erroneous":true,"correction":{"fr":"","en":"Each provision covers only its original purpose; these fees are an expense of the period (or a new provision if the criteria are met).","es":""}},{"id":"S4","text":{"fr":"","en":"The compensation paid to the former employee, the subject of the employment dispute, is charged against the corresponding provision.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000094","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"USE_FOR_ORIGINAL_PURPOSE","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"use-for-original-purpose"},"references":["IAS 37 §61","IAS 37 §62"],"exercise":{"prompt":{"fr":"","en":"A restructuring provision that has become too high may be used to absorb the cost of an advertising campaign, to avoid a new expense.","es":""},"explanation":{"fr":"","en":"False. A provision is used only for the expenditures for which it was originally recognised (IAS 37, para. 61); the excess is reversed and the campaign is an expense of the period, otherwise the impact of the two events would be concealed (IAS 37, para. 62).","es":""},"common_error":{"fr":"","en":"Using the excess of a provision for another expense: it may only be used for the expenditures for which it was recognised.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000095","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","format":"CALCULATION","context":"HOME_APPLIANCES","tested_point":"PROVISION_MOVEMENTS","difficulty":"INTERMEDIATE","estimated_time_s":180,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"how"},"references":["IAS 37 §59","IAS 37 §61"],"exercise":{"prompt":{"fr":"","en":"Lumérac's warranty provision amounts to 210,000 at 1 January N+1. In N+1, repairs paid amount to 175,000. At 31 December N+1, the best estimate of the warranties outstanding (sales of N and N+1) is 240,000. Calculate.","es":""},"explanation":{"fr":"","en":"Use: 175,000 charged against the provision (IAS 37, para. 61); balance before adjustment: 210,000 − 175,000 = 35,000. The provision is adjusted to the current best estimate (IAS 37, para. 59): a charge of 240,000 − 35,000 = 205,000.","es":""},"common_error":{"fr":"","en":"Charging only the change in the balance (30,000) and forgetting the uses.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":"210000","unit":"EUR"},{"label":{"fr":"","en":"Repairs paid in N+1","es":""},"value":"175000","unit":"EUR"},{"label":{"fr":"","en":"Best estimate at 31 December N+1","es":""},"value":"240000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Balance after uses","es":""},"answer":35000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Charge for N+1","es":""},"answer":205000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Balance after uses","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":210000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Repairs paid in N+1","es":""},"value":175000,"unit":"EUR"}],"result":35000,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Charge for N+1","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Best estimate at 31 December N+1","es":""},"value":240000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Balance after uses","es":""},"value":35000,"unit":"EUR"}],"result":205000,"unit":"EUR","rationale":{"fr":"","en":"The provision is adjusted to the current best estimate (IAS 37, para. 59): a charge of 240,000 − 35,000 = 205,000.","es":""}}],"references":["REF.IAS37.59","REF.IAS37.61"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000096","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE","IAS37.DISCLOSURE.PROVISIONS"],"dimension":"ANALYSIS","format":"MINI_CASE","context":"ENERGY","tested_point":"PROVISION_LIFE_RATE_CHANGE","difficulty":"EXPERT","estimated_time_s":600,"lesson_id":"LS.IAS37.000009","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"judgment"},"references":["IAS 37 §59","IAS 37 §60","IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"Follow Ezelia's decommissioning provision in N+1 and prepare its disclosure.","es":""},"explanation":{"fr":"","en":"The provision increases with the passage of time (borrowing cost, IAS 37, para. 60) and is adjusted to the current best estimate, including when the market rate changes (IAS 37, para. 59). The reconciliation shows separately the increase due to the passage of time and the effect of the change in the discount rate (IAS 37, para. 84).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Ezelia, a fictitious operator of a small hydroelectric plant, will have to dismantle a water intake at the end of N+2 for 496,125 (expected expenditure, unchanged). At 1 January N+1, the provision is 450,000, discounted at 5%.","es":""},"exhibits":[{"title":{"fr":"","en":"N+1 data (case data)","es":""},"body":{"fr":"","en":"- Unwinding for the year at the opening rate (5%).\n- At 31 December N+1, the pre-tax rate reflecting current market conditions and the risks specific to the liability falls to 4%.\n- No use or reversal in N+1.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Calculate the N+1 movements (rounded to the euro).","es":""},"explanation":{"fr":"","en":"Unwinding: 450,000 × 5% = 22,500 → 472,500 (IAS 37, para. 60). New amount at 4%, one year before settlement: 496,125 / 1.04 = 477,043 (IAS 37, para. 59). Effect of the rate change: 477,043 − 472,500 = 4,543.","es":""},"common_error":{"fr":"","en":"Computing only the unwinding at the opening rate: the provision is also remeasured at the new closing rate.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":"450000","unit":"EUR"},{"label":{"fr":"","en":"Expected expenditure at end of N+2","es":""},"value":"496125","unit":"EUR"},{"label":{"fr":"","en":"Opening rate","es":""},"value":"5","unit":"PERCENT"},{"label":{"fr":"","en":"Rate at 31 December N+1","es":""},"value":"4","unit":"PERCENT"}],"steps":[{"id":"S1","label":{"fr":"","en":"Unwinding for N+1","es":""},"answer":22500,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Provision at 31 December N+1","es":""},"answer":477043,"tolerance":1,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Effect of the rate change","es":""},"answer":4543,"tolerance":1,"unit":"EUR"}],"id":"P1","dimension":"CALCULATION","formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Unwinding for N+1","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision at 1 January N+1","es":""},"value":450000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Opening rate","es":""},"value":5,"unit":"PERCENT"}],"result":22500,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Provision at 31 December N+1","es":""},"expression":"a / (1 + b)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Expected expenditure at end of N+2","es":""},"value":496125,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Rate at 31 December N+1","es":""},"value":4,"unit":"PERCENT"}],"result":477043,"unit":"EUR"}],"references":["REF.IAS37.59","REF.IAS37.60"]}},{"prompt":{"fr":"","en":"Which lines must the reconciliation for this class include for N+1?","es":""},"explanation":{"fr":"","en":"For each class: carrying amount at the beginning and end, provisions made, amounts used, amounts reversed, increase due to the passage of time and effect of the change in the discount rate (IAS 37, para. 84); comparative information is not required.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Opening 450,000 and closing 477,043","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Increase due to the passage of time: 22,500","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Effect of the change in the discount rate: 4,543","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A single \"provisions made\" line of 27,043","es":""},"correct":false,"feedback":{"fr":"","en":"Unwinding and the rate effect are shown separately.","es":""}}],"id":"P2","dimension":"DOCUMENTATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000097","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"RETAIL","tested_point":"NO_FUTURE_OPERATING_LOSSES","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63"],"exercise":{"prompt":{"fr":"","en":"A chain of shops that expects losses of 300,000 next year in a loss-making shop recognises a provision for those losses.","es":""},"explanation":{"fr":"","en":"False. Provisions are not recognised for future operating losses (IAS 37, para. 63).","es":""},"common_error":{"fr":"","en":"Providing for future operating losses: they are not a present obligation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000098","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"HOSPITALITY","tested_point":"LOSSES_IMPAIRMENT_INDICATOR","difficulty":"INTERMEDIATE","estimated_time_s":75,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §65","IAS 36 §9"],"exercise":{"prompt":{"fr":"","en":"The budgets of Estrevo Hôtels, a fictitious group, forecast operating losses for three of its hotels for the next two years. What accounting consequence at 31 December N?","es":""},"explanation":{"fr":"","en":"An expectation of future operating losses indicates that certain assets may be impaired: they are tested under IAS 36 (IAS 37, para. 65). IAS 36 requires the recoverable amount to be estimated when there is an indication of impairment (IAS 36, para. 9). No provision for the losses themselves.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Test the assets of the three hotels under IAS 36, without a provision for future losses","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provide for the losses of the next two years","es":""},"correct":false,"feedback":{"fr":"","en":"Future operating losses are never provided for.","es":""}},{"id":"C","text":{"fr":"","en":"Disclose a contingent liability","es":""},"correct":false,"feedback":{"fr":"","en":"Future losses are neither a present nor a possible obligation arising from a past event.","es":""}},{"id":"D","text":{"fr":"","en":"Nothing: a budget has no accounting consequence","es":""},"correct":false,"feedback":{"fr":"","en":"Expected losses are an indication of impairment that requires a test.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000099","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"NO_FUTURE_OPERATING_LOSSES","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63","IAS 37 §64"],"exercise":{"prompt":{"fr":"","en":"Why are future operating losses not provided for?","es":""},"explanation":{"fr":"","en":"They meet neither the definition of a liability (no present obligation arising from a past event) nor the general recognition criteria (IAS 37, paras. 63 and 64).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"They do not meet the definition of a liability","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"They do not meet the general recognition criteria for provisions","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Because they can never be estimated","es":""},"correct":false,"feedback":{"fr":"","en":"Future losses can often be budgeted; the reason is the absence of a present obligation.","es":""}},{"id":"D","text":{"fr":"","en":"Because IAS 36 recognises them as a provision instead","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 36 tests the value of assets; it does not provide for future losses.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000100","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"MEDIA","tested_point":"LOSSES_IMPAIRMENT_INDICATOR","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"pitfalls"},"references":["IAS 37 §63","IAS 37 §65","IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"Review the memo of the CFO of Cindral Médias, a fictitious publisher, on its declining magazine.","es":""},"explanation":{"fr":"","en":"No provision for future operating losses (IAS 37, para. 63); expected losses are an indication of impairment to be tested under IAS 36 (IAS 37, para. 65). Only an onerous contract gives rise to a provision (IAS 37, para. 66).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"We provide for the 420,000 of losses forecast for the magazine for N+1 and N+2.","es":""},"erroneous":true,"correction":{"fr":"","en":"Future operating losses: no provision.","es":""}},{"id":"S2","text":{"fr":"","en":"These expected losses lead us to test the title and the presses under IAS 36.","es":""},"erroneous":false},{"id":"S3","text":{"fr":"","en":"The firm fixed-price paper purchase contract, which has become onerous, is provided for in respect of its unavoidable loss.","es":""},"erroneous":false},{"id":"S4","text":{"fr":"","en":"Without a provision, we disclose the future losses as a contingent liability.","es":""},"erroneous":true,"correction":{"fr":"","en":"Future losses are not a contingent liability: there is neither a present nor a possible obligation arising from a past event.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000101","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"RETAIL","tested_point":"CANCELLABLE_NO_OBLIGATION","difficulty":"BEGINNER","estimated_time_s":60,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §67"],"exercise":{"prompt":{"fr":"","en":"A retailer has placed a purchase order for toys that it can cancel without any compensation until delivery. The toys will sell at a loss: it must provide for this contract as onerous.","es":""},"explanation":{"fr":"","en":"False. A contract that can be cancelled without paying compensation creates no obligation: there is nothing to provide for (IAS 37, para. 67).","es":""},"common_error":{"fr":"","en":"Treating as onerous a contract that can be cancelled without penalty: without an obligation, there is nothing to provide for.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000102","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"ENGINEERING","tested_point":"ONEROUS_TEST","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68","IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"Which of these firm contracts, with no possibility of exit, is onerous within IAS 37?","es":""},"explanation":{"fr":"","en":"A contract is onerous when the unavoidable costs of meeting the contractual obligations exceed the economic benefits expected under it (IAS 37, para. 68); in practice (reading adopted in this course), the contract is onerous when its cost of fulfilling exceeds the expected benefits; with no possible exit, the provision is that excess. Only contract B (780,000 > 720,000) is onerous; it is provided for (IAS 37, para. 66). A reduced margin or an opportunity cost does not make a contract onerous.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Contract A: cost of fulfilling 690,000, price 700,000","es":""},"correct":false,"feedback":{"fr":"","en":"The margin is small but positive: the contract is not onerous.","es":""}},{"id":"B","text":{"fr":"","en":"Contract B: cost of fulfilling 780,000, price 720,000","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Contract C: cost of fulfilling 500,000, price 560,000, but another customer would pay 650,000","es":""},"correct":false,"feedback":{"fr":"","en":"A forgone profit is not an unavoidable cost: the contract remains profitable.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000103","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","format":"CALCULATION","context":"MANUFACTURING","tested_point":"COST_OF_FULFILLING","difficulty":"INTERMEDIATE","estimated_time_s":210,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"cost-of-fulfilling"},"references":["IAS 37 §68","IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Falcine Pièces, a fictitious manufacturer, must deliver in N+1, with no possibility of cancellation, 5,000 parts at 120. Unit costs: materials 70, direct labour 35. The press used for this contract and others is depreciated by 400,000 a year; 10% of its hours will go to this contract (allocation basis used, case assumption). Is the contract onerous?","es":""},"explanation":{"fr":"","en":"Cost of fulfilling = incremental costs + allocation of other costs that relate directly to fulfilling contracts (IAS 37, para. 68A): 5,000 × 105 = 525,000; 400,000 × 10% = 40,000; total 565,000. Benefits: 5,000 × 120 = 600,000. The cost of fulfilling does not exceed the benefits (net cost of fulfilling nil): the contract is not onerous (IAS 37, para. 68), provision 0.","es":""},"common_error":{"fr":"","en":"Using incremental costs only, or concluding it is onerous without comparing with benefits: cost of fulfilling 565,000 against 600,000, the contract is not onerous.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Quantity","es":""},"value":"5000","unit":"UNITS"},{"label":{"fr":"","en":"Unit price","es":""},"value":"120","unit":"EUR"},{"label":{"fr":"","en":"Direct materials and labour per part","es":""},"value":"105","unit":"EUR"},{"label":{"fr":"","en":"Annual depreciation of the press","es":""},"value":"400000","unit":"EUR"},{"label":{"fr":"","en":"Share allocated to the contract","es":""},"value":"10","unit":"PERCENT"}],"steps":[{"id":"S1","label":{"fr":"","en":"Incremental costs","es":""},"answer":525000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Cost of fulfilling","es":""},"answer":565000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":0,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Incremental costs","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Quantity","es":""},"value":5000,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Direct materials and labour per part","es":""},"value":105,"unit":"EUR"}],"result":525000,"unit":"EUR","rationale":{"fr":"","en":"Cost of fulfilling = incremental costs + allocation of other costs that relate directly to fulfilling contracts (IAS 37, para. 68A): 5,000 × 105 = 525,000","es":""}}],"references":["REF.IAS37.68","REF.IAS37.68A"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000104","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","format":"CALCULATION","context":"FOOD","tested_point":"COST_OF_FULFILLING","difficulty":"ADVANCED","estimated_time_s":240,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"cost-of-fulfilling"},"references":["IAS 37 §68","IAS 37 §68A","IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"Dunemar Conserves, a fictitious company, has undertaken to deliver 12,000 cartons of tinned food at 48 to a retailer in N+1; the contract provides no exit and the retailer can require performance. Costs per carton: materials 29, direct labour 14. The sterilisation line, used for this contract and others, is depreciated by 520,000 a year; 15% of its time will go to this contract (case assumption). \"Allocable\" head-office costs: 30,000. The IAS 36 test of the line reveals no loss (case data). Calculate.","es":""},"explanation":{"fr":"","en":"Incremental costs: 12,000 × 43 = 516,000; allocated depreciation: 520,000 × 15% = 78,000; cost of fulfilling 594,000 (IAS 37, para. 68A). Head-office costs do not relate directly to fulfilling the contract: excluded. Benefits: 12,000 × 48 = 576,000. The cost of fulfilling exceeds the benefits: onerous contract. No possible exit, so no penalty to compare: the least net cost of exiting is the net cost of fulfilling (IAS 37, para. 68); provision: 594,000 − 576,000 = 18,000 (IAS 37, para. 66).","es":""},"common_error":{"fr":"","en":"Using only incremental costs (the contract would look profitable) or adding head-office costs.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Cartons","es":""},"value":"12000","unit":"UNITS"},{"label":{"fr":"","en":"Price per carton","es":""},"value":"48","unit":"EUR"},{"label":{"fr":"","en":"Direct costs per carton","es":""},"value":"43","unit":"EUR"},{"label":{"fr":"","en":"Annual depreciation of the line","es":""},"value":"520000","unit":"EUR"},{"label":{"fr":"","en":"Share allocated to the contract","es":""},"value":"15","unit":"PERCENT"},{"label":{"fr":"","en":"\"Allocable\" head-office costs","es":""},"value":"30000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Cost of fulfilling","es":""},"answer":594000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Expected economic benefits","es":""},"answer":576000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":18000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S2","meaning":{"fr":"","en":"Expected economic benefits","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cartons","es":""},"value":12000,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Price per carton","es":""},"value":48,"unit":"EUR"}],"result":576000,"unit":"EUR"},{"step":"S3","meaning":{"fr":"","en":"Onerous contract provision","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"value":594000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Expected economic benefits","es":""},"value":576000,"unit":"EUR"}],"result":18000,"unit":"EUR"}],"references":["REF.IAS37.68","REF.IAS37.68A","REF.IAS37.66"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000105","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"MANUFACTURING","tested_point":"COST_OF_FULFILLING_COMPONENTS","difficulty":"INTERMEDIATE","estimated_time_s":120,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"cost-of-fulfilling"},"references":["IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Classify each cost according to whether or not it is part of the cost of fulfilling a manufacturing contract.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises the costs that relate directly to the contract: incremental costs (direct labour and materials) and an allocation of other costs that relate directly to fulfilling contracts, such as the share of depreciation of equipment used for this and other contracts (IAS 37, para. 68A). Costs with no direct relation to fulfilment (head office, prospecting) are excluded.","es":""},"common_error":{"fr":"","en":"Excluding the share of depreciation of the shared machine, or including head office costs: only costs directly related to fulfilment count.","es":""},"format":"CLASSIFICATION","categories":[{"id":"IN","text":{"fr":"","en":"Included in the cost of fulfilling","es":""}},{"id":"OUT","text":{"fr":"","en":"Excluded","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Raw materials consumed by the contract","es":""},"category":"IN"},{"id":"I2","text":{"fr":"","en":"Wages of operators assigned to producing the contract","es":""},"category":"IN"},{"id":"I3","text":{"fr":"","en":"Share of depreciation of the machine used for this contract and others","es":""},"category":"IN"},{"id":"I4","text":{"fr":"","en":"General costs of the head-office legal department","es":""},"category":"OUT"},{"id":"I5","text":{"fr":"","en":"Costs of prospecting for new customers","es":""},"category":"OUT"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000106","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"FOOD","tested_point":"RECORD_ONEROUS","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"entry"},"references":["IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"Record the onerous contract provision of Dunemar Conserves at 31 December N (18,000).","es":""},"explanation":{"fr":"","en":"The present obligation under the onerous contract is recognised as a provision (IAS 37, para. 66): debit Onerous contract expense 18,000, credit Onerous contract provision 18,000.","es":""},"common_error":{"fr":"","en":"Recognising the deficit as a reduction of revenue or without a provision: the obligation under the onerous contract is a provision.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"ONEROUS_EXPENSE","text":{"fr":"","en":"Onerous contract expense","es":""}},{"id":"ONEROUS_PROVISION","text":{"fr":"","en":"Onerous contract provision","es":""}},{"id":"REVENUE","text":{"fr":"","en":"Revenue","es":""}},{"id":"IMPAIRMENT_LOSS","text":{"fr":"","en":"Impairment loss","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}}],"lines":[{"id":"L1","account":"ONEROUS_EXPENSE","side":"DEBIT","amount":18000},{"id":"L2","account":"ONEROUS_PROVISION","side":"CREDIT","amount":18000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000107","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"APPLICATION","format":"ORDERING","context":"GENERIC","tested_point":"IMPAIRMENT_BEFORE_ONEROUS","difficulty":"ADVANCED","estimated_time_s":120,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"how"},"references":["IAS 37 §67","IAS 37 §68","IAS 37 §69"],"exercise":{"prompt":{"fr":"","en":"Put in order the analysis of a contract that appears onerous at the year end.","es":""},"explanation":{"fr":"","en":"First check that an obligation exists (contract not cancellable without compensation, IAS 37, para. 67), then compare the cost of fulfilling with the benefits and retain the least net cost of exiting, the lower of the net cost of fulfilling and the penalty (IAS 37, para. 68). Before any separate provision, the entity recognises any impairment loss on the assets used to fulfil the contract (IAS 37, para. 69); the provision then covers the remaining deficit.","es":""},"common_error":{"fr":"","en":"Providing for the whole deficit before testing the assets used: their impairment is recognised first; the provision covers the rest.","es":""},"format":"ORDERING","steps":[{"id":"S1","text":{"fr":"","en":"Check that the contract cannot be cancelled without compensation","es":""}},{"id":"S2","text":{"fr":"","en":"Calculate the cost of fulfilling and, where relevant, the exit penalty","es":""}},{"id":"S3","text":{"fr":"","en":"Compare the cost of fulfilling with the expected benefits, then retain the lower of the net cost of fulfilling and the exit penalty","es":""}},{"id":"S4","text":{"fr":"","en":"Test under IAS 36 the assets used to fulfil the contract and recognise any impairment loss","es":""}},{"id":"S5","text":{"fr":"","en":"Recognise the provision for the remaining deficit","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000108","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"IMPAIRMENT_BEFORE_ONEROUS","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"impairment-first"},"references":["IAS 37 §69","IAS 36 §59","IAS 36 §60"],"exercise":{"prompt":{"fr":"","en":"A contract is onerous and a machine is used only to fulfil it. Which statements are correct?","es":""},"explanation":{"fr":"","en":"Before a separate provision is set up, the entity recognises any impairment loss on the assets used to fulfil the contract (IAS 37, para. 69); if the recoverable amount is below the carrying amount, the asset is reduced to it (IAS 36, para. 59) and the loss is recognised in profit or loss, except for a revalued asset (IAS 36, para. 60).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The machine is tested under IAS 36 before any separate provision","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"An impairment loss reduces the machine to its recoverable amount","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The provision is set up first; the machine test waits until the next year end","es":""},"correct":false,"feedback":{"fr":"","en":"The order is the reverse: impairment first, then a provision for the balance.","es":""}},{"id":"D","text":{"fr":"","en":"The impairment loss and the provision each cover the whole deficit","es":""},"correct":false,"feedback":{"fr":"","en":"That would be double counting: the provision only covers what the impairment has not absorbed.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000109","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","format":"MINI_CASE","context":"FOOD","tested_point":"IMPAIRMENT_BEFORE_ONEROUS_MINI_CASE","difficulty":"EXPERT","estimated_time_s":720,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"impairment-first"},"references":["IAS 37 §66","IAS 37 §68","IAS 37 §68A","IAS 37 §69","IAS 36 §59","IAS 36 §60"],"exercise":{"prompt":{"fr":"","en":"Account for the onerous contract of Garonis Emballage at 31 December N.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises incremental costs and the allocation of other directly related costs, including depreciation of the line (IAS 37, para. 68A). Before the provision, the impairment loss on the line is recognised (IAS 37, para. 69; IAS 36, paras. 59 and 60); the remaining depreciation to allocate falls, and the provision covers the remaining deficit (IAS 37, paras. 66 and 68). The recoverable amount is case data.","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Garonis Emballage, a fictitious co-packer, must perform in N+1 the last year of a firm beverage packing contract for a distributor, with no possibility of exit. The rise in the price of aluminium has made the contract costly.","es":""},"exhibits":[{"title":{"fr":"","en":"Data at 31 December N (case data)","es":""},"body":{"fr":"","en":"- N+1 volume: 200,000 units at 2.50; incremental costs: 2.10 per unit.\n- Packing line dedicated to this contract only: carrying amount 150,000, fully depreciated over N+1 (end of the contract).\n- IAS 36 test of the line: recoverable amount 90,000 (fair value less costs of disposal, higher than value in use).","es":""}}],"parts":[{"prompt":{"fr":"","en":"Where should you start?","es":""},"explanation":{"fr":"","en":"The impairment loss on the assets used to fulfil the contract is recognised before any separate provision (IAS 37, para. 69).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Recognise the impairment loss on the line","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provide for the deficit of 70,000","es":""},"correct":false,"feedback":{"fr":"","en":"That would ignore the impairment loss, which must be recognised first; the deficit would be counted twice.","es":""}}],"id":"P1","dimension":"ANALYSIS"},{"prompt":{"fr":"","en":"Calculate.","es":""},"explanation":{"fr":"","en":"Impairment loss: 150,000 − 90,000 = 60,000 (IAS 36, para. 59). Cost of fulfilling after impairment: 420,000 + 90,000 = 510,000 (IAS 37, para. 68A). Benefits: 500,000. Provision: 510,000 − 500,000 = 10,000. Total charge: 70,000, equal to the initial deficit (570,000 − 500,000).","es":""},"common_error":{"fr":"","en":"Providing for the whole deficit (70,000) without impairing the line: the impairment reduces the cost of fulfilling; the provision covers only the rest.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Expected benefits","es":""},"value":"500000","unit":"EUR"},{"label":{"fr":"","en":"Incremental costs","es":""},"value":"420000","unit":"EUR"},{"label":{"fr":"","en":"Carrying amount of the line","es":""},"value":"150000","unit":"EUR"},{"label":{"fr":"","en":"Recoverable amount of the line","es":""},"value":"90000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Impairment loss","es":""},"answer":60000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Cost of fulfilling after impairment","es":""},"answer":510000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":10000,"tolerance":0,"unit":"EUR"}],"id":"P2","dimension":"CALCULATION","formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Impairment loss","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Carrying amount of the line","es":""},"value":150000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Recoverable amount of the line","es":""},"value":90000,"unit":"EUR"}],"result":60000,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Cost of fulfilling after impairment","es":""},"expression":"a + b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Incremental costs","es":""},"value":420000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Recoverable amount of the line","es":""},"value":90000,"unit":"EUR"}],"result":510000,"unit":"EUR"},{"step":"S3","meaning":{"fr":"","en":"Onerous contract provision","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling after impairment","es":""},"value":510000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Expected benefits","es":""},"value":500000,"unit":"EUR"}],"result":10000,"unit":"EUR"}],"references":["REF.IAS37.68A","REF.IAS36.59"]}},{"prompt":{"fr":"","en":"Record the entries at 31 December N.","es":""},"explanation":{"fr":"","en":"Impairment: debit Impairment loss 60,000, credit Property, plant and equipment 60,000 (IAS 36, para. 60). Provision: debit Onerous contract expense 10,000, credit Onerous contract provision 10,000 (IAS 37, para. 66).","es":""},"common_error":{"fr":"","en":"Crediting the impairment to a provision: it directly reduces the asset; only the remaining deficit is a provision.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"IMPAIRMENT_LOSS","text":{"fr":"","en":"Impairment loss","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}},{"id":"ONEROUS_EXPENSE","text":{"fr":"","en":"Onerous contract expense","es":""}},{"id":"ONEROUS_PROVISION","text":{"fr":"","en":"Onerous contract provision","es":""}},{"id":"REVENUE","text":{"fr":"","en":"Revenue","es":""}}],"lines":[{"id":"L1","account":"IMPAIRMENT_LOSS","side":"DEBIT","amount":60000},{"id":"L2","account":"PPE","side":"CREDIT","amount":60000},{"id":"L3","account":"ONEROUS_EXPENSE","side":"DEBIT","amount":10000},{"id":"L4","account":"ONEROUS_PROVISION","side":"CREDIT","amount":10000}],"id":"P3","dimension":"JOURNAL_ENTRY"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000110","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"CONSTRUCTION","tested_point":"NOT_ONEROUS_OUT_OF_SCOPE","difficulty":"ADVANCED","estimated_time_s":90,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"judgment"},"references":["IAS 37 §67","IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"A firm contract to supply concrete, not yet performed, remains profitable but its margin falls from 12% to 2% after the rise in cement prices. The CFO wants to \"provide for the lost margin\". What should the answer be?","es":""},"explanation":{"fr":"","en":"An executory contract that is not onerous remains outside the scope of IAS 37 (IAS 37, paras. 3 and 67): a fall in margin, as long as the benefits cover the unavoidable costs, creates no provision.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision: the contract is not onerous","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Provide for the 10 points of margin lost","es":""},"correct":false,"feedback":{"fr":"","en":"A forgone profit is not an unavoidable loss; only an onerous contract is provided for.","es":""}},{"id":"C","text":{"fr":"","en":"Disclose a contingent liability","es":""},"correct":false,"feedback":{"fr":"","en":"A profitable contract creates neither a liability nor a contingent liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000111","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"AUTOMOTIVE","tested_point":"ONEROUS_REVIEW","difficulty":"EXPERT","estimated_time_s":180,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"pitfalls"},"references":["IAS 37 §63","IAS 37 §68","IAS 37 §68A","IAS 37 §69"],"exercise":{"prompt":{"fr":"","en":"Review the onerous contract provision calculation prepared by the controller of Novalith, a fictitious maker of cast car parts (firm contract, no exit clause).","es":""},"explanation":{"fr":"","en":"Cost of fulfilling: incremental costs and an allocation of other directly related costs, without head-office costs (IAS 37, para. 68A); with no possible exit, provision = cost of fulfilling − expected benefits (IAS 37, para. 68); impairment of the dedicated assets first (IAS 37, para. 69); no future operating losses (IAS 37, para. 63).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"I used only materials and labour: depreciation of the furnace does not depend on the contract.","es":""},"erroneous":true,"correction":{"fr":"","en":"The share of depreciation of equipment used to fulfil the contract is part of the cost of fulfilling.","es":""}},{"id":"S2","text":{"fr":"","en":"I added a share of head-office costs to be complete.","es":""},"erroneous":true,"correction":{"fr":"","en":"Head-office costs do not relate directly to fulfilling the contract: they are excluded.","es":""}},{"id":"S3","text":{"fr":"","en":"As the contract provides no exit, there is no penalty to compare: the provision is the cost of fulfilling less the expected benefits.","es":""},"erroneous":false},{"id":"S4","text":{"fr":"","en":"I set up the provision before testing the dedicated mould, which will be tested next year.","es":""},"erroneous":true,"correction":{"fr":"","en":"Any impairment loss on the assets used to fulfil the contract is recognised before the provision.","es":""}},{"id":"S5","text":{"fr":"","en":"The plant's expected losses on its other products are not included.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000112","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RECOGNITION","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"RESTRUCTURING_EVENTS","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37 §70"],"exercise":{"prompt":{"fr":"","en":"Which of these events may constitute a restructuring within IAS 37?","es":""},"explanation":{"fr":"","en":"Examples of restructuring: sale or termination of a line of business; closure of business locations in a country or region, or relocation of activities; changes in management structure (eliminating a layer of management); fundamental reorganisations with a material effect on the nature and focus of operations (IAS 37, para. 70). An individual replacement or an annual pay review is part of ordinary management.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A textile company's termination of its \"workwear\" line of business","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The closure of all branches in a region","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The elimination of the regional director layer","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Replacing the sales director who has retired","es":""},"correct":false,"feedback":{"fr":"","en":"An individual replacement does not materially change the scope or the manner of conducting the business.","es":""}},{"id":"E","text":{"fr":"","en":"The annual pay review","es":""},"correct":false,"feedback":{"fr":"","en":"This is ordinary management, not a programme that materially changes the business.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000113","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","format":"SINGLE_CHOICE","context":"TEXTILE","tested_point":"CONSTRUCTIVE_OBLIGATION_RESTRUCTURING","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"decision-before-year-end"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 5 December N, the board of Sabrelle, a fictitious spinning mill, approves a detailed plan to close its Lyon site (headcount, costs, timetable). At 31 December N, nothing has been announced or started; the announcement to employees is planned for 20 January N+1. Is a provision required at 31 December N?","es":""},"explanation":{"fr":"","en":"A constructive obligation to restructure requires a detailed formal plan and a valid expectation raised in those affected by starting to implement it or announcing it (IAS 37, para. 72). A decision taken before the year end does not give rise to an obligation at the year end without implementation or an announcement before that date (IAS 37, para. 75); disclosure under IAS 10 may be required if the restructuring is material.","es":""},"common_error":{"fr":"","en":"Believing that the board's decision is enough to create the obligation.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No: no valid expectation exists at the year end; disclosure possible under IAS 10","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Yes: the plan is detailed and approved before the year end","es":""},"correct":false,"feedback":{"fr":"","en":"A detailed plan is necessary but not sufficient: a valid expectation raised before the year end is also needed.","es":""}},{"id":"C","text":{"fr":"","en":"Yes, for the severance payments only","es":""},"correct":false,"feedback":{"fr":"","en":"Without a constructive obligation at the year end, no component of the restructuring is provided for.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000114","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"ANALYSIS","format":"CLASSIFICATION","context":"GENERIC","tested_point":"CONSTRUCTIVE_OBLIGATION_RESTRUCTURING","difficulty":"ADVANCED","estimated_time_s":180,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"constructive-obligation"},"references":["IAS 37","IAS 37 §73"],"exercise":{"prompt":{"fr":"","en":"For each restructuring timeline (year end 31 December N, detailed formal plan unless stated otherwise), indicate whether a constructive obligation exists at 31 December N.","es":""},"explanation":{"fr":"","en":"A constructive obligation requires a detailed plan and a valid expectation raised before the year end by starting implementation (dismantling, selling assets) or by a sufficiently specific announcement of the main features (IAS 37, paras. 72, 73 and 75). A very long delay before starting makes a valid expectation unlikely (IAS 37, para. 74); a vague statement is not enough.","es":""},"common_error":{"fr":"","en":"Seeing an obligation in a plan approved but announced after year-end, or in a vague statement: a precise announcement or start of implementation before year-end is needed.","es":""},"format":"CLASSIFICATION","categories":[{"id":"YES","text":{"fr":"","en":"Constructive obligation at 31 December N","es":""}},{"id":"NO","text":{"fr":"","en":"No obligation at 31 December N","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Plan announced in November to employees and their representatives: site, number of jobs, compensation and closure date (March N+1)","es":""},"category":"YES"},{"id":"I2","text":{"fr":"","en":"Plan approved on 15 December, announced on 10 January N+1","es":""},"category":"NO"},{"id":"I3","text":{"fr":"","en":"Dismantling of the site's lines started on 1 December, in line with the plan","es":""},"category":"YES"},{"id":"I4","text":{"fr":"","en":"Press release: \"the group is considering how its industrial footprint will evolve\", without a detailed plan","es":""},"category":"NO"},{"id":"I5","text":{"fr":"","en":"Detailed plan announced in December, whose implementation will only start in four years","es":""},"category":"NO"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000115","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","format":"TRUE_FALSE","context":"MEDIA","tested_point":"SALE_NEEDS_BINDING_AGREEMENT","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"sale-of-operation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A media group decided and publicly announced in November N the sale of its advertising agency; no buyer has yet been identified at 31 December N. It has an obligation in respect of this sale at the year end.","es":""},"explanation":{"fr":"","en":"False. The sale of an operation creates no obligation until there is a binding sale agreement, even if it has been decided and publicly announced (IAS 37, paras. 78 and 79). The assets of the operation are tested for impairment under IAS 36.","es":""},"common_error":{"fr":"","en":"Seeing an obligation in an announced sale with no buyer: until there is a binding sale agreement, the sale creates no obligation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000116","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"ANALYSIS","format":"SINGLE_CHOICE","context":"INDUSTRIAL","tested_point":"SALE_NEEDS_BINDING_AGREEMENT","difficulty":"ADVANCED","estimated_time_s":90,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"sale-of-operation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Corlane, a fictitious manufacturer, is restructuring its \"pumps\" division: closure of a workshop (detailed plan announced to employees in November N) and sale of the brand, for which no binding agreement exists at 31 December N. Which analysis is correct?","es":""},"explanation":{"fr":"","en":"Where the sale is only part of a restructuring, a constructive obligation can arise for the other parts before a binding sale agreement exists; the assets whose sale is envisaged are tested for impairment under IAS 36 (IAS 37, para. 79).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provision for the workshop closure; no obligation for the sale; IAS 36 test of the assets to be sold","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"No provision until the brand is sold","es":""},"correct":false,"feedback":{"fr":"","en":"The absence of a binding agreement concerns the sale; the announced closure already creates a constructive obligation.","es":""}},{"id":"C","text":{"fr":"","en":"Provision for the whole, including an expected loss on the sale of the brand","es":""},"correct":false,"feedback":{"fr":"","en":"The sale creates no obligation without a binding agreement; the value of the brand is a matter for the IAS 36 test.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000117","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"FORMAL_PLAN_CONTENT","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"constructive-obligation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Which items must a detailed formal restructuring plan specify as a minimum?","es":""},"explanation":{"fr":"","en":"The plan identifies at least the business or part of the business concerned, the principal locations affected, the location, function and approximate number of employees who will be compensated, the expenditures to be undertaken and when the plan will be implemented (IAS 37, para. 72). Neither a list of employees by name nor the expected savings is part of this minimum.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The business concerned and the principal locations affected","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The location, function and approximate number of employees to be compensated","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The expenditures to be undertaken and the implementation date","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The list of dismissed employees by name","es":""},"correct":false,"feedback":{"fr":"","en":"An approximate number by location and function is enough.","es":""}},{"id":"E","text":{"fr":"","en":"The expected annual savings","es":""},"correct":false,"feedback":{"fr":"","en":"Future savings are not among the minimum items of the plan.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000118","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"PROFESSIONAL_JUDGMENT","format":"MINI_CASE","context":"FURNITURE","tested_point":"RESTRUCTURING_JUDGMENT_FILE","difficulty":"EXPERT","estimated_time_s":660,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"judgment"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Analyse Westrel's restructuring at 31 December N.","es":""},"explanation":{"fr":"","en":"A constructive obligation requires a detailed plan and a valid expectation in those affected (IAS 37, para. 72). Where employee representatives must be informed before the decision, a decision involving that communication may create a constructive obligation (IAS 37, para. 77). If implementation or the announcement occurs after the year end, no provision, but disclosure under IAS 10 if the restructuring is material (IAS 37, para. 75).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Westrel, a fictitious furniture maker, wants to merge its two plants. In its country, the works council must be informed in detail before any closure decision (case data).","es":""},"exhibits":[{"title":{"fr":"","en":"Timeline (case data)","es":""},"body":{"fr":"","en":"- 2 December N: detailed plan (Tours plant, 85 jobs, compensation, costs, closure on 30 June N+1).\n- 12 December N: detailed presentation of the plan to the works council, then board decision to close the plant under that plan; employees are informed the same day.\n- Variant: if the presentation to the works council and the decision had taken place on 8 January N+1.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Is there a constructive obligation at 31 December N?","es":""},"explanation":{"fr":"","en":"Yes: the plan is detailed, the decision was taken after informing the works council and employees were informed before the year end, which raises a valid expectation (IAS 37, paras. 72 and 77).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"No, no plant has been closed yet","es":""},"correct":false,"feedback":{"fr":"","en":"Actual closure is not required: a sufficiently specific announcement raises the valid expectation.","es":""}},{"id":"C","text":{"fr":"","en":"No, a board decision never creates an obligation","es":""},"correct":false,"feedback":{"fr":"","en":"On its own, no; but here the decision is communicated to those affected and follows the information of the works council.","es":""}}],"id":"P1","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"Variant: if the presentation to the works council and the decision had taken place on 8 January N+1, Westrel would have no provision at 31 December N, but would have to consider disclosure under IAS 10 if the restructuring is material.","es":""},"explanation":{"fr":"","en":"True. Without implementation or an announcement before the year end, no constructive obligation exists at the year end; when these events occur after the year end, disclosure under IAS 10 is given if the restructuring is material and its omission could influence the decisions of users (IAS 37, para. 75).","es":""},"common_error":{"fr":"","en":"Providing at 31 December N for a restructuring decided in January N+1, or ignoring it: there is no provision, but IAS 10 disclosure if material.","es":""},"format":"TRUE_FALSE","answer":true,"id":"P2","dimension":"RULE_KNOWLEDGE"},{"prompt":{"fr":"","en":"Which documents should be kept on file to support the provision at 31 December N (good practice)?","es":""},"explanation":{"fr":"","en":"The file evidences the two conditions for a constructive obligation (detailed plan; valid expectation raised before the year end, IAS 37, para. 72): the dated plan, minutes of the works council and of the board, evidence of the communication to employees. Savings forecasts do not evidence the obligation.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The plan dated 2 December and its details","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The minutes of the works council and of the board of 12 December","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Evidence that employees were informed before the year end","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The table of savings expected after the merger","es":""},"correct":false,"feedback":{"fr":"","en":"Future savings do not establish that the obligation exists at the year end.","es":""}}],"id":"P3","dimension":"DOCUMENTATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000119","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"BANKING","tested_point":"CONSTRUCTIVE_OBLIGATION_RESTRUCTURING","difficulty":"ADVANCED","estimated_time_s":150,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"pitfalls"},"references":["IAS 37 §71","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Review the memo of the financial controller of Kalista, a fictitious regional bank, on its branch closure programme.","es":""},"explanation":{"fr":"","en":"A restructuring provision requires the general criteria (IAS 37, para. 71) and a constructive obligation: a detailed plan and a valid expectation raised before the year end (IAS 37, paras. 72 and 75). The sale of an operation creates no obligation without a binding agreement (IAS 37, para. 78).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"The plan to close 12 branches was announced in detail to staff and customers on 28 November: a provision is required.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"On 20 December, the board voted to close 5 other branches, announced in February: we also provide for this, as the decision preceded the year end.","es":""},"erroneous":true,"correction":{"fr":"","en":"Without implementation or an announcement before the year end, no constructive obligation at the year end; disclosure under IAS 10 if material.","es":""}},{"id":"S3","text":{"fr":"","en":"We provide for the expected loss on the sale of our leasing subsidiary, publicly announced but with no buyer.","es":""},"erroneous":true,"correction":{"fr":"","en":"Without a binding sale agreement, the sale creates no obligation; the value of the assets is a matter for an impairment test.","es":""}},{"id":"S4","text":{"fr":"","en":"The provision is recognised only if the general recognition criteria are also met.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000120","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"CONSTRUCTIVE_OBLIGATION_RESTRUCTURING","difficulty":"INTERMEDIATE","estimated_time_s":60,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"constructive-obligation"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A restructuring plan announced in detail always creates a constructive obligation, whatever the delay before implementation starts.","es":""},"explanation":{"fr":"","en":"False. To create a constructive obligation, implementation must be planned to begin as soon as possible and be completed in a timeframe that makes significant changes unlikely; a long delay makes a valid expectation unlikely, as the entity still has the opportunity to change its plans (IAS 37, para. 74).","es":""},"common_error":{"fr":"","en":"Believing a detailed announcement is always enough: a long delay before implementation prevents a valid expectation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000121","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"MANUFACTURING","tested_point":"ELIGIBLE_RESTRUCTURING_COSTS","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Ulmira, a fictitious toy maker, is closing its Lille plant (constructive obligation established). Classify each item.","es":""},"explanation":{"fr":"","en":"The provision includes only the direct expenditures, both necessarily entailed by the restructuring and not associated with the ongoing activities (IAS 37, para. 80). It excludes retraining or relocating continuing staff, marketing and new systems (IAS 37, para. 81), and future operating losses (IAS 37, para. 82); expected disposal gains are not deducted (IAS 37, para. 83).","es":""},"common_error":{"fr":"","en":"Including training, relocation of retained staff, advertising or operating losses: they are excluded; only the direct costs of the closure go into the provision.","es":""},"format":"CLASSIFICATION","categories":[{"id":"IN","text":{"fr":"","en":"Included in the provision","es":""}},{"id":"OUT","text":{"fr":"","en":"Excluded from the provision","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Severance payments for the Lille employees","es":""},"category":"IN"},{"id":"I2","text":{"fr":"","en":"Penalties for terminating the maintenance contracts of the closed plant","es":""},"category":"IN"},{"id":"I3","text":{"fr":"","en":"Training of employees transferred to the Nantes plant","es":""},"category":"OUT"},{"id":"I4","text":{"fr":"","en":"Relocation costs of employees who are kept","es":""},"category":"OUT"},{"id":"I5","text":{"fr":"","en":"Advertising campaign announcing the new range","es":""},"category":"OUT"},{"id":"I6","text":{"fr":"","en":"Operating losses of Lille until closure","es":""},"category":"OUT"},{"id":"I7","text":{"fr":"","en":"Dismantling and removal of the machines of the closed plant","es":""},"category":"IN"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000122","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"CALCULATION","format":"CALCULATION","context":"MANUFACTURING","tested_point":"RESTRUCTURING_PROVISION_CALC","difficulty":"INTERMEDIATE","estimated_time_s":210,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"numeric-example"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Ulmira case continued (estimated amounts, discounting not material): severance payments 840,000; penalties for terminating the site maintenance contracts 65,000; dismantling the site machines 110,000; training transferred staff 70,000; advertising campaign 45,000; new ERP software 180,000; operating losses until closure 120,000; expected gain on sale of the building 300,000. Calculate the provision.","es":""},"explanation":{"fr":"","en":"Direct expenditures (IAS 37, para. 80): 840,000 + 65,000 + 110,000 = 1,015,000. Excluded: training, advertising, software (IAS 37, para. 81) and operating losses (IAS 37, para. 82); the disposal gain is not deducted (IAS 37, para. 83).","es":""},"common_error":{"fr":"","en":"Deducting the disposal gain (715,000) or including all project-related costs (1,430,000).","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Severance payments","es":""},"value":"840000","unit":"EUR"},{"label":{"fr":"","en":"Termination penalties (closed site)","es":""},"value":"65000","unit":"EUR"},{"label":{"fr":"","en":"Dismantling of the site machines","es":""},"value":"110000","unit":"EUR"},{"label":{"fr":"","en":"Training of transferred staff","es":""},"value":"70000","unit":"EUR"},{"label":{"fr":"","en":"Advertising campaign","es":""},"value":"45000","unit":"EUR"},{"label":{"fr":"","en":"New software","es":""},"value":"180000","unit":"EUR"},{"label":{"fr":"","en":"Operating losses until closure","es":""},"value":"120000","unit":"EUR"},{"label":{"fr":"","en":"Expected gain on sale of the building","es":""},"value":"300000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Restructuring provision","es":""},"answer":1015000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Restructuring provision","es":""},"expression":"a + b + c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Severance payments","es":""},"value":840000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Termination penalties (closed site)","es":""},"value":65000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Dismantling of the site machines","es":""},"value":110000,"unit":"EUR"}],"result":1015000,"unit":"EUR"}],"references":["REF.IAS37.80","REF.IAS37.81","REF.IAS37.82","REF.IAS37.83"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000123","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"CALCULATION","format":"CALCULATION","context":"BANKING","tested_point":"RESTRUCTURING_PROVISION_CALC","difficulty":"ADVANCED","estimated_time_s":240,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Kalista is closing 12 branches (constructive obligation established at 31 December N). Estimates: compensation for dismissed employees 460,000; penalties for terminating the cleaning and remote-monitoring contracts of the closed branches 28,000; removal of cash machines and signs from the closed branches 37,000; relocation of advisers who are kept 54,000; new mobile app 260,000; operating losses of the branches until closure 75,000; expected gain on sale of the premises 410,000. Calculate.","es":""},"explanation":{"fr":"","en":"Direct expenditures, entailed by the restructuring and not associated with ongoing activities (IAS 37, para. 80): 460,000 + 28,000 + 37,000 = 525,000. Relocating advisers and the app relate to ongoing activities (IAS 37, para. 81); operating losses excluded (IAS 37, para. 82); gain not deducted (IAS 37, para. 83).","es":""},"common_error":{"fr":"","en":"Adding the relocation and the app, or deducting the expected gain: only the direct closure costs are included, with no offset by the expected gain.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Severance payments","es":""},"value":"460000","unit":"EUR"},{"label":{"fr":"","en":"Termination penalties (closed branches)","es":""},"value":"28000","unit":"EUR"},{"label":{"fr":"","en":"Removal of cash machines and signs","es":""},"value":"37000","unit":"EUR"},{"label":{"fr":"","en":"Relocation of advisers kept","es":""},"value":"54000","unit":"EUR"},{"label":{"fr":"","en":"New mobile app","es":""},"value":"260000","unit":"EUR"},{"label":{"fr":"","en":"Operating losses until closure","es":""},"value":"75000","unit":"EUR"},{"label":{"fr":"","en":"Expected gain on the premises","es":""},"value":"410000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Restructuring provision","es":""},"answer":525000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Restructuring provision","es":""},"expression":"a + b + c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Severance payments","es":""},"value":460000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Termination penalties (closed branches)","es":""},"value":28000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Removal of cash machines and signs","es":""},"value":37000,"unit":"EUR"}],"result":525000,"unit":"EUR","rationale":{"fr":"","en":"Direct expenditures, entailed by the restructuring and not associated with ongoing activities (IAS 37, para. 80): 460,000 + 28,000 + 37,000 = 525,000.","es":""}}],"references":["REF.IAS37.80","REF.IAS37.81","REF.IAS37.82","REF.IAS37.83"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000124","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"JOURNAL_ENTRY","format":"JOURNAL_ENTRY","context":"MANUFACTURING","tested_point":"RECORD_RESTRUCTURING","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"entry"},"references":["IAS 37 §80"],"exercise":{"prompt":{"fr":"","en":"Record Ulmira's restructuring provision at 31 December N (1,015,000).","es":""},"explanation":{"fr":"","en":"Debit Restructuring expense 1,015,000, credit Restructuring provision 1,015,000, for the direct expenditures only (IAS 37, para. 80). The expected gain on the building is not recognised at this stage.","es":""},"common_error":{"fr":"","en":"Recognising the expected gain on the building at the same time: it is not recognised at this stage and does not reduce the provision.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"RESTRUCTURING_EXPENSE","text":{"fr":"","en":"Restructuring expense","es":""}},{"id":"RESTRUCTURING_PROVISION","text":{"fr":"","en":"Restructuring provision","es":""}},{"id":"OTHER_INCOME","text":{"fr":"","en":"Other income","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}},{"id":"CASH","text":{"fr":"","en":"Cash","es":""}}],"lines":[{"id":"L1","account":"RESTRUCTURING_EXPENSE","side":"DEBIT","amount":1015000},{"id":"L2","account":"RESTRUCTURING_PROVISION","side":"CREDIT","amount":1015000}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000125","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"RULE_KNOWLEDGE","format":"SINGLE_CHOICE","context":"RETAIL","tested_point":"ELIGIBLE_RESTRUCTURING_COSTS","difficulty":"BEGINNER","estimated_time_s":60,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A retailer is closing 20 shops and training the sales staff it keeps in online selling. How should this training cost be treated?","es":""},"explanation":{"fr":"","en":"Training continuing staff relates to the future conduct of the business: it is excluded from the provision and recognised as if it arose independently of the restructuring (IAS 37, para. 81).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"An expense when incurred, outside the provision","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Included in the restructuring provision","es":""},"correct":false,"feedback":{"fr":"","en":"It benefits the ongoing activities: it is not a direct restructuring expenditure.","es":""}},{"id":"C","text":{"fr":"","en":"Contingent liability","es":""},"correct":false,"feedback":{"fr":"","en":"There is no present or possible obligation: it is a future operating expense.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000126","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"TEXTILE","tested_point":"RESTRUCTURING_COSTS_REVIEW","difficulty":"ADVANCED","estimated_time_s":180,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"pitfalls"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"The HR department of Zarvane, a fictitious garment maker, has costed the provision for closing a workshop. Spot the lines that do not comply.","es":""},"explanation":{"fr":"","en":"Only direct expenditures, necessarily entailed by the restructuring and not associated with ongoing activities, are included (IAS 37, para. 80); costs relating to continuing staff are excluded (IAS 37, para. 81), as are operating losses up to the restructuring (IAS 37, para. 82); disposal gains are not deducted (IAS 37, para. 83).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"Severance payments for the 40 seamstresses of the closed workshop.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"Retention bonuses for managers who will continue their careers in the other workshops.","es":""},"erroneous":true,"correction":{"fr":"","en":"These bonuses relate to continuing staff and ongoing activities: excluded.","es":""}},{"id":"S3","text":{"fr":"","en":"Deduction of the expected gain on selling the workshop machines.","es":""},"erroneous":true,"correction":{"fr":"","en":"Expected disposal gains are not deducted from the provision.","es":""}},{"id":"S4","text":{"fr":"","en":"Operating losses of the workshop until its closure.","es":""},"erroneous":true,"correction":{"fr":"","en":"Future operating losses up to the restructuring are excluded (unless they relate to an onerous contract).","es":""}},{"id":"S5","text":{"fr":"","en":"Removal of the machines from the closed workshop.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000127","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"GAIN_NOT_DEDUCTED_RESTRUCTURING","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000011","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37","IAS 37 §51"],"exercise":{"prompt":{"fr":"","en":"When the sale of a building is part of the restructuring, the expected gain on that sale reduces the restructuring provision.","es":""},"explanation":{"fr":"","en":"False. Expected gains on the disposal of assets are not taken into account, even if the sale is part of the restructuring (IAS 37, paras. 83 and 51).","es":""},"common_error":{"fr":"","en":"Deducting the expected gain from the provision: disposal gains are not taken into account, even in a restructuring.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000128","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"CALCULATION","format":"CALCULATION","context":"INDUSTRIAL","tested_point":"ROLL_FORWARD","difficulty":"INTERMEDIATE","estimated_time_s":180,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"Prepare the reconciliation of the \"Site restoration\" class of Flovane, a fictitious manufacturer, for N+1: opening 320,000; new provisions and increases 140,000; amounts used 95,000; unused amounts reversed 25,000; unwinding of the discount 12,000.","es":""},"explanation":{"fr":"","en":"For each class: opening, provisions made, amounts used, amounts reversed, increase due to the passage of time, closing (IAS 37, para. 84): 320,000 + 140,000 − 95,000 − 25,000 + 12,000 = 352,000. Outflow movements total 120,000.","es":""},"common_error":{"fr":"","en":"Forgetting the unwinding or treating it as a decrease: it increases the provision and appears on its own line.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Opening","es":""},"value":"320000","unit":"EUR"},{"label":{"fr":"","en":"Provisions made","es":""},"value":"140000","unit":"EUR"},{"label":{"fr":"","en":"Amounts used","es":""},"value":"95000","unit":"EUR"},{"label":{"fr":"","en":"Amounts reversed","es":""},"value":"25000","unit":"EUR"},{"label":{"fr":"","en":"Unwinding of the discount","es":""},"value":"12000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Total decreases (uses and reversals)","es":""},"answer":120000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Closing","es":""},"answer":352000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S2","meaning":{"fr":"","en":"Closing","es":""},"expression":"a + b - c - d + e","variables":[{"symbol":"a","meaning":{"fr":"","en":"Opening","es":""},"value":320000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provisions made","es":""},"value":140000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Amounts used","es":""},"value":95000,"unit":"EUR"},{"symbol":"d","meaning":{"fr":"","en":"Amounts reversed","es":""},"value":25000,"unit":"EUR"},{"symbol":"e","meaning":{"fr":"","en":"Unwinding of the discount","es":""},"value":12000,"unit":"EUR"}],"result":352000,"unit":"EUR","rationale":{"fr":"","en":"For each class: opening, provisions made, amounts used, amounts reversed, increase due to the passage of time, closing (IAS 37, para. 84): 320,000 + 140,000 − 95,000 − 25,000 + 12,000 = 352,000.","es":""}}],"references":["REF.IAS37.84"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000129","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"CALCULATION","format":"CALCULATION","context":"ENERGY","tested_point":"ROLL_FORWARD","difficulty":"ADVANCED","estimated_time_s":210,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"In the reconciliation of decommissioning provisions of Hovane, a fictitious energy company, one line is missing. Opening 480,000; new provisions 110,000; uses 160,000; increase due to the passage of time 18,000; effect of the fall in the discount rate 7,000; closing 430,000 (carrying amount checked). Find the amounts reversed.","es":""},"explanation":{"fr":"","en":"480,000 + 110,000 − 160,000 + 18,000 + 7,000 − reversals = 430,000 ⇒ reversals = 25,000. The increase due to time and the effect of the rate change are two separate lines of the reconciliation (IAS 37, para. 84).","es":""},"common_error":{"fr":"","en":"Merging the time effect and the rate change effect, or deducting them: they are two increases shown on separate lines.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Opening","es":""},"value":"480000","unit":"EUR"},{"label":{"fr":"","en":"New provisions","es":""},"value":"110000","unit":"EUR"},{"label":{"fr":"","en":"Uses","es":""},"value":"160000","unit":"EUR"},{"label":{"fr":"","en":"Increase due to the passage of time","es":""},"value":"18000","unit":"EUR"},{"label":{"fr":"","en":"Effect of the fall in the rate","es":""},"value":"7000","unit":"EUR"},{"label":{"fr":"","en":"Closing","es":""},"value":"430000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Amounts reversed","es":""},"answer":25000,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000130","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"QUALITATIVE_DISCLOSURES","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"qualitative-provisions"},"references":["IAS 37 §85","IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"Which qualitative disclosures does IAS 37 require for each class of provision?","es":""},"explanation":{"fr":"","en":"For each class: a brief description of the nature of the obligation and the expected timing of outflows; an indication of the uncertainties about their amount or timing, with the major assumptions about future events where necessary; the amount of any expected reimbursement and of the asset recognised for it (IAS 37, para. 85). Comparative information for the reconciliation is not required (IAS 37, para. 84).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The nature of the obligation and the expected timing of outflows","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The uncertainties about the amount or timing, with the major assumptions where necessary","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The amount of any expected reimbursement and of the asset recognised for it","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The previous year's reconciliation","es":""},"correct":false,"feedback":{"fr":"","en":"Comparative information for the reconciliation is not required.","es":""}},{"id":"E","text":{"fr":"","en":"The names of the lawyers handling each dispute","es":""},"correct":false,"feedback":{"fr":"","en":"The standard does not require this information.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000131","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"PROFESSIONAL_JUDGMENT","format":"CLASSIFICATION","context":"HOME_APPLIANCES","tested_point":"PROVISION_CLASSES","difficulty":"INTERMEDIATE","estimated_time_s":150,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"classes"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Isaline, a fictitious household appliance maker, groups its provisions into classes for the notes. Put each provision in the most relevant class.","es":""},"explanation":{"fr":"","en":"Items form a single class only if their nature is sufficiently similar for a single statement about nature, timing and uncertainty to fulfil the requirements; normal warranties and amounts subject to legal proceedings do not form a single class (IAS 37, para. 87). The grouping chosen remains a matter of judgement.","es":""},"common_error":{"fr":"","en":"Classifying a lawsuit with the warranties: amounts subject to legal proceedings do not form one class with normal warranties.","es":""},"format":"CLASSIFICATION","categories":[{"id":"WARRANTY","text":{"fr":"","en":"Warranties","es":""}},{"id":"LITIGATION","text":{"fr":"","en":"Litigation","es":""}},{"id":"RESTORATION","text":{"fr":"","en":"Restoration","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Legal warranties on dishwashers sold","es":""},"category":"WARRANTY"},{"id":"I2","text":{"fr":"","en":"Legal warranties on ovens sold","es":""},"category":"WARRANTY"},{"id":"I3","text":{"fr":"","en":"Lawsuit brought by a customer whose kitchen burnt down","es":""},"category":"LITIGATION"},{"id":"I4","text":{"fr":"","en":"Contentious claim by a former distributor","es":""},"category":"LITIGATION"},{"id":"I5","text":{"fr":"","en":"Clean-up of the soil of the paint plant","es":""},"category":"RESTORATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000132","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"ROLL_FORWARD","difficulty":"BEGINNER","estimated_time_s":45,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"IAS 37 requires the reconciliation of provisions to be presented for both the current and the previous year.","es":""},"explanation":{"fr":"","en":"False. Comparative information is not required for this reconciliation (IAS 37, para. 84).","es":""},"common_error":{"fr":"","en":"Requiring comparatives for the movement table: they are not required for this table.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000133","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"MINING","tested_point":"LINKED_PROVISION_CONTINGENCY","difficulty":"EXPERT","estimated_time_s":120,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"classes"},"references":["IAS 37","IAS 37 §29"],"exercise":{"prompt":{"fr":"","en":"Pradolin case continued: the rehabilitation of the pond gives rise to a provision (Pradolin's probable share) and a contingent liability (the partners' expected share). How should they be presented in the notes?","es":""},"explanation":{"fr":"","en":"Where a provision and a contingent liability arise from the same set of circumstances, the disclosures are made in a way that shows the link between them (IAS 37, para. 88); here, joint and several liability creates both items (IAS 37, para. 29).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"In a presentation that shows the link between the provision and the contingent liability","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Separately, with no cross-reference, so as not to confuse recognised and unrecognised items","es":""},"correct":false,"feedback":{"fr":"","en":"The link must precisely be shown when both arise from the same circumstances.","es":""}},{"id":"C","text":{"fr":"","en":"The provision only; the contingent liability is not disclosed","es":""},"correct":false,"feedback":{"fr":"","en":"The contingent liability is disclosed, unless the outflow is remote, and linked to the provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000134","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","format":"MULTIPLE_CHOICE","context":"GENERIC","tested_point":"CONTINGENT_LIABILITY_DISCLOSURE","difficulty":"INTERMEDIATE","estimated_time_s":90,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §86"],"exercise":{"prompt":{"fr":"","en":"Unless the outflow is remote, which information must be disclosed for each class of contingent liability?","es":""},"explanation":{"fr":"","en":"A brief description of the nature and, where practicable, an estimate of the financial effect (measured under paras. 36 to 52), an indication of the uncertainties about the amount or timing, and the possibility of any reimbursement (IAS 37, para. 86). No amount is recognised.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A brief description of their nature","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"An estimate of the financial effect, where practicable","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The uncertainties about the amount or timing and the possibility of any reimbursement","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The journal entry recorded to recognise them","es":""},"correct":false,"feedback":{"fr":"","en":"A contingent liability is not recognised: there is no entry.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000135","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"DOCUMENTATION","format":"ERROR_SPOT","context":"PHARMA","tested_point":"CONTINGENT_ASSET_NOTE","difficulty":"ADVANCED","estimated_time_s":180,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-assets-disclosure"},"references":["IAS 37","IAS 37 §91","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Review the draft note on contingent assets of Belvire, a fictitious laboratory. Spot the passages that do not comply.","es":""},"explanation":{"fr":"","en":"Where an inflow is probable, the entity gives a brief description of the nature of the contingent assets and, where practicable, an estimate of their financial effect (IAS 37, para. 89); the disclosure avoids any misleading indication of the likelihood of income arising (IAS 37, para. 90); if an estimate is not practicable, that fact is stated (IAS 37, para. 91). An inflow that is merely possible is not disclosed (IAS 37, para. 34).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"\"Belvire is suing a competitor for patent infringement; its counsel considers a favourable outcome probable; compensation is estimated between 1.5 and 2 million.\"","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"\"These 2 million are practically secured and will boost N+1 profit.\"","es":""},"erroneous":true,"correction":{"fr":"","en":"Misleading wording: the inflow is only probable; the note must not suggest that the income is secured.","es":""}},{"id":"S3","text":{"fr":"","en":"\"For the claim against a subcontractor, it is not practicable to estimate the financial effect, as the expert assessment is under way.\"","es":""},"erroneous":false},{"id":"S4","text":{"fr":"","en":"\"Among our forthcoming income, we also mention a claim against a supplier, whose success is merely possible, for 0.8 million.\"","es":""},"erroneous":true,"correction":{"fr":"","en":"A contingent asset is disclosed only if the inflow is probable; presenting a claim whose success is merely possible as forthcoming income gives a misleading impression.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000136","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"PROFESSIONAL_JUDGMENT","format":"SINGLE_CHOICE","context":"TELECOM","tested_point":"SERIOUS_PREJUDICE","difficulty":"EXPERT","estimated_time_s":120,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"serious-prejudice"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Ernestal, a fictitious operator, is in a dispute with a competitor. Publishing the estimate of the provision would reveal its defence strategy and could seriously prejudice its position in the dispute. What can it do?","es":""},"explanation":{"fr":"","en":"In extremely rare cases, the entity may refrain from disclosing some or all of the information required by paras. 84 to 89 where disclosure could seriously prejudice its position in a dispute; it then discloses the general nature of the dispute, the fact that the information has not been disclosed and the reason why (IAS 37, para. 92). The provision is still recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Omit the sensitive information, disclosing the general nature of the dispute, the fact that it is not disclosed and why","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Say nothing about the dispute","es":""},"correct":false,"feedback":{"fr":"","en":"The exemption never removes the need to disclose the general nature of the dispute, the fact of the omission and the reason.","es":""}},{"id":"C","text":{"fr":"","en":"Not recognise the provision to protect the defence","es":""},"correct":false,"feedback":{"fr":"","en":"The exemption concerns disclosure, not recognition.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000137","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","format":"TRUE_FALSE","context":"GENERIC","tested_point":"SERIOUS_PREJUDICE","difficulty":"INTERMEDIATE","estimated_time_s":45,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"serious-prejudice"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"The serious prejudice exemption allows an entity, in a sensitive dispute, to disclose nothing at all, not even the existence of the dispute.","es":""},"explanation":{"fr":"","en":"False. Even in this extremely rare case, the entity discloses the general nature of the dispute, the fact that the information has not been disclosed and the reason why (IAS 37, para. 92).","es":""},"common_error":{"fr":"","en":"Thinking the exemption allows the dispute's existence to be hidden: the entity still discloses its general nature, the fact that information is withheld and why.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000138","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"DOCUMENTATION","format":"MINI_CASE","context":"LOGISTICS","tested_point":"CONTINGENCIES_NOTE_FILE","difficulty":"EXPERT","estimated_time_s":660,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"example"},"references":["IAS 37 §28","IAS 37 §34","IAS 37 §86","IAS 37","IAS 37 §91"],"exercise":{"prompt":{"fr":"","en":"Prepare Pastrel's \"Contingent liabilities and assets\" note at 31 December N.","es":""},"explanation":{"fr":"","en":"Contingent liability not remote: nature, financial effect if practicable, uncertainties, possible reimbursement (IAS 37, para. 86); remote outflow: nothing (IAS 37, para. 28). Probable contingent asset: nature and financial effect if practicable (IAS 37, paras. 89 and 34), with no misleading impression (IAS 37, para. 90); estimate not practicable: say so (IAS 37, para. 91). Income taxes fall under IAS 12 (IAS 37, para. 5).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Pastrel, a fictitious refrigerated transport company, lists four files at 31 December N.","es":""},"exhibits":[{"title":{"fr":"","en":"Files (case data)","es":""},"body":{"fr":"","en":"1. A wholesaler claims 600,000 for a break in the cold chain; the absence of liability is more likely, but an award is not remote; the insurer might cover part.\n2. A customer claims 40,000 for a delay; the lawyer considers any award remote.\n3. Pastrel is suing a maker of defective refrigeration units; success is considered probable; the ongoing expert assessment prevents the amount from being estimated.\n4. A tax audit covers income tax for N−1.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Classify each file according to the disclosure it requires under IAS 37.","es":""},"explanation":{"fr":"","en":"File 1: contingent liability not remote (IAS 37, para. 86). File 2: remote outflow, nothing (IAS 37, para. 28). File 3: probable contingent asset (IAS 37, para. 89). File 4: outside IAS 37, income taxes (IAS 37, para. 5).","es":""},"common_error":{"fr":"","en":"Dealing with the tax audit under IAS 37 or disclosing a liability with a remote outflow: income tax falls under IAS 12; a remote outflow requires nothing.","es":""},"format":"CLASSIFICATION","categories":[{"id":"CL","text":{"fr":"","en":"Contingent liability to describe","es":""}},{"id":"CA","text":{"fr":"","en":"Contingent asset to describe","es":""}},{"id":"NONE","text":{"fr":"","en":"No disclosure under IAS 37","es":""}},{"id":"OTHER","text":{"fr":"","en":"Another standard (IAS 12)","es":""}}],"items":[{"id":"D1","text":{"fr":"","en":"File 1 (wholesaler)","es":""},"category":"CL"},{"id":"D2","text":{"fr":"","en":"File 2 (delay)","es":""},"category":"NONE"},{"id":"D3","text":{"fr":"","en":"File 3 (refrigeration units)","es":""},"category":"CA"},{"id":"D4","text":{"fr":"","en":"File 4 (tax audit)","es":""},"category":"OTHER"}],"id":"P1","dimension":"RECOGNITION"},{"prompt":{"fr":"","en":"Review the draft note: spot the passages that do not comply.","es":""},"explanation":{"fr":"","en":"The contingent liability is described with its estimated financial effect, its uncertainties and the possibility of reimbursement (IAS 37, para. 86); the contingent asset is described without a misleading impression (IAS 37, para. 90); the impracticability of an estimate is stated (IAS 37, para. 91); income tax falls under IAS 12 (IAS 37, para. 5).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"\"A wholesaler claims 600,000 for a break in the cold chain; Pastrel disputes liability; the outcome and the date of the judgment are uncertain; partial cover by the insurer is possible.\"","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"\"Pastrel is certain to win against the manufacturer, which will clearly improve its results.\"","es":""},"erroneous":true,"correction":{"fr":"","en":"The inflow is only probable: describe the nature of the claim without suggesting that income is secured.","es":""}},{"id":"S3","text":{"fr":"","en":"\"The amount of the claim against the manufacturer is not given.\"","es":""},"erroneous":true,"correction":{"fr":"","en":"It must be stated that an estimate is not practicable, as the expert assessment is ongoing.","es":""}},{"id":"S4","text":{"fr":"","en":"\"The tax audit of income tax for N−1 is dealt with under the standard on income taxes (IAS 12).\"","es":""},"erroneous":false}],"id":"P2","dimension":"DOCUMENTATION"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000139","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RECOGNITION","format":"CLASSIFICATION","context":"GENERIC","tested_point":"CONTINGENCIES_DISCLOSURE_TRIAGE","difficulty":"BEGINNER","estimated_time_s":90,"lesson_id":"LS.IAS37.000012","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"how"},"references":["IAS 37 §28","IAS 37 §34","IAS 37 §86","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Classify each situation according to whether or not it calls for disclosure in the notes.","es":""},"explanation":{"fr":"","en":"Contingent liability: disclosure unless the outflow is remote (IAS 37, paras. 28 and 86). Contingent asset: disclosure only if the inflow is probable (IAS 37, paras. 34 and 89).","es":""},"common_error":{"fr":"","en":"Applying the same threshold to contingent assets and liabilities: a liability is disclosed unless remote, an asset only if the inflow is probable.","es":""},"format":"CLASSIFICATION","categories":[{"id":"DISCLOSE","text":{"fr":"","en":"Disclosure required","es":""}},{"id":"NONE","text":{"fr":"","en":"No disclosure","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Contingent liability, outflow possible but not probable","es":""},"category":"DISCLOSE"},{"id":"I2","text":{"fr":"","en":"Contingent liability, remote outflow","es":""},"category":"NONE"},{"id":"I3","text":{"fr":"","en":"Contingent asset, probable inflow","es":""},"category":"DISCLOSE"},{"id":"I4","text":{"fr":"","en":"Contingent asset, inflow merely possible","es":""},"category":"NONE"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000140","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","format":"CALCULATION","context":"LOGISTICS","tested_point":"LEAST_NET_COST_EXIT","difficulty":"INTERMEDIATE","estimated_time_s":240,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"least-net-cost"},"references":["IAS 37 §66","IAS 37 §68","IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Quarvela Transports, a fictitious haulier, has undertaken to make a retailer's deliveries in N+1 for a fixed price of 1,250,000. After the rise in diesel prices, performing the contract would cost it 1,240,000 of incremental costs (fuel, drivers) and 160,000 as a share of the depreciation of the lorries used for this contract and others (mileage key, case assumption). The contract allows withdrawal on payment of an indemnity of 90,000. No impairment loss on the lorries (case data). Calculate.","es":""},"explanation":{"fr":"","en":"Cost of fulfilling = incremental costs + allocation of other directly related costs (IAS 37, para. 68A): 1,240,000 + 160,000 = 1,400,000, above the benefits of 1,250,000: the contract is onerous. Net cost of fulfilling: 1,400,000 − 1,250,000 = 150,000. The indemnity of 90,000 is lower: exiting is the least costly route and the provision is 90,000 (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""},"common_error":{"fr":"","en":"Providing for the net cost of fulfilling (150,000) and forgetting that exiting costs only 90,000.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Fixed price (expected benefits)","es":""},"value":"1250000","unit":"EUR"},{"label":{"fr":"","en":"Incremental costs","es":""},"value":"1240000","unit":"EUR"},{"label":{"fr":"","en":"Share of lorry depreciation","es":""},"value":"160000","unit":"EUR"},{"label":{"fr":"","en":"Withdrawal indemnity","es":""},"value":"90000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Cost of fulfilling","es":""},"answer":1400000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Net cost of fulfilling","es":""},"answer":150000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":90000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"expression":"a + b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Incremental costs","es":""},"value":1240000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Share of lorry depreciation","es":""},"value":160000,"unit":"EUR"}],"result":1400000,"unit":"EUR","rationale":{"fr":"","en":"Cost of fulfilling = incremental costs + allocation of other directly related costs (IAS 37, para. 68A): 1,240,000 + 160,000 = 1,400,000, above the benefits of 1,250,000: the contract is onerous.","es":""}},{"step":"S2","meaning":{"fr":"","en":"Net cost of fulfilling","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"value":1400000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Fixed price (expected benefits)","es":""},"value":1250000,"unit":"EUR"}],"result":150000,"unit":"EUR"}],"references":["REF.IAS37.66","REF.IAS37.68","REF.IAS37.68A"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000141","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","format":"CALCULATION","context":"HOSPITALITY","tested_point":"LEAST_NET_COST_FULFIL","difficulty":"INTERMEDIATE","estimated_time_s":240,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"least-net-cost"},"references":["IAS 37 §66","IAS 37 §68","IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Selvanto Restauration, a fictitious caterer, must still serve a school canteen's meals for 2 years, at 395,000 a year. Annual costs of fulfilling: incremental costs (food, serving staff) 380,000; share of the depreciation of the central kitchen, used for this contract and others, 40,000 (meals-produced key, case assumption). Early termination would cost an indemnity of 120,000. Discounting is not material and the kitchen shows no impairment loss (case data). Calculate.","es":""},"explanation":{"fr":"","en":"Cost of fulfilling (IAS 37, para. 68A): (380,000 + 40,000) × 2 = 840,000; benefits: 395,000 × 2 = 790,000. The cost of fulfilling exceeds the benefits: the contract is onerous. Net cost of fulfilling: 840,000 − 790,000 = 50,000, below the indemnity of 120,000: fulfilling is the least costly route and the provision is 50,000 (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""},"common_error":{"fr":"","en":"Comparing the indemnity with the gross cost of fulfilling: the lower of 840,000 and 120,000, less 790,000, is negative and would wrongly lead to no provision.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Annual price received (expected benefits)","es":""},"value":"395000","unit":"EUR"},{"label":{"fr":"","en":"Annual incremental costs","es":""},"value":"380000","unit":"EUR"},{"label":{"fr":"","en":"Annual share of kitchen depreciation","es":""},"value":"40000","unit":"EUR"},{"label":{"fr":"","en":"Remaining years","es":""},"value":"2","unit":"YEARS"},{"label":{"fr":"","en":"Early termination indemnity","es":""},"value":"120000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Cost of fulfilling over the remaining term","es":""},"answer":840000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Net cost of fulfilling","es":""},"answer":50000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":50000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"S1","meaning":{"fr":"","en":"Cost of fulfilling over the remaining term","es":""},"expression":"(a + b) * c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Annual incremental costs","es":""},"value":380000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Annual share of kitchen depreciation","es":""},"value":40000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Remaining years","es":""},"value":2,"unit":"YEARS"}],"result":840000,"unit":"EUR"},{"step":"S2","meaning":{"fr":"","en":"Net cost of fulfilling","es":""},"expression":"a - (b * c)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling over the remaining term","es":""},"value":840000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Annual price received (expected benefits)","es":""},"value":395000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Remaining years","es":""},"value":2,"unit":"YEARS"}],"result":50000,"unit":"EUR","rationale":{"fr":"","en":"Net cost of fulfilling: 840,000 − 790,000 = 50,000, below the indemnity of 120,000: fulfilling is the least costly route and the provision is 50,000 (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""}}],"references":["REF.IAS37.66","REF.IAS37.68","REF.IAS37.68A"]}},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000142","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","format":"MINI_CASE","context":"TEXTILE","tested_point":"ONEROUS_FULFIL_OR_EXIT_MINI_CASE","difficulty":"ADVANCED","estimated_time_s":720,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"least-net-cost"},"references":["IAS 37 §66","IAS 37 §67","IAS 37 §68","IAS 37 §68A","IAS 37 §69"],"exercise":{"prompt":{"fr":"","en":"Account for the Mirvane Tissages contract at 31 December N.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling is built up under para. 68A (incremental costs and an allocation of other directly related costs). The contract is onerous if that cost exceeds the expected benefits; the provision is then the lower of the net cost of fulfilling and the exit indemnity (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""},"format":"MINI_CASE","scenario":{"fr":"","en":"Mirvane Tissages, a fictitious weaver, has firmly undertaken to deliver a technical fabric to a blind manufacturer in N+1. Soaring yarn prices have made the contract costly. The contract allows Mirvane to withdraw by paying the customer a lump-sum indemnity.","es":""},"exhibits":[{"title":{"fr":"","en":"Data at 31 December N (case data)","es":""},"body":{"fr":"","en":"- Quantity still to be delivered: 40,000 metres at 18 a metre.\n- Yarn: 9.50 per metre; direct labour: 4.00 per metre.\n- Looms used for this contract and others: N+1 depreciation of 900,000; 25% of the machine hours will go to this contract (allocation basis used, case assumption).\n- Share of head-office costs 'allocable' to the contract: 35,000.\n- Withdrawal indemnity provided in the contract: 30,000.\n- IAS 36 test of the looms: no impairment loss.","es":""}}],"parts":[{"prompt":{"fr":"","en":"Classify each item according to whether or not it is part of the cost of fulfilling the contract.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises incremental costs (yarn, direct labour) and an allocation of other directly related costs, such as depreciation of the looms used (IAS 37, para. 68A). Head-office costs are not directly related; the indemnity is not a cost of fulfilling, it is the cost of the other route, exiting.","es":""},"common_error":{"fr":"","en":"Including the withdrawal fee or head office costs in the cost of fulfilling: the former is the cost of exiting, the latter are not directly related.","es":""},"format":"CLASSIFICATION","categories":[{"id":"IN","text":{"fr":"","en":"Cost of fulfilling","es":""}},{"id":"OUT","text":{"fr":"","en":"Excluded","es":""}}],"items":[{"id":"I1","text":{"fr":"","en":"Yarn used by the contract","es":""},"category":"IN"},{"id":"I2","text":{"fr":"","en":"Weavers' direct labour","es":""},"category":"IN"},{"id":"I3","text":{"fr":"","en":"Share of loom depreciation","es":""},"category":"IN"},{"id":"I4","text":{"fr":"","en":"Share of head-office costs","es":""},"category":"OUT"},{"id":"I5","text":{"fr":"","en":"Withdrawal indemnity","es":""},"category":"OUT"}],"id":"P1","dimension":"APPLICATION"},{"prompt":{"fr":"","en":"Calculate.","es":""},"explanation":{"fr":"","en":"Incremental costs: 40,000 × (9.50 + 4.00) = 540,000; allocation: 900,000 × 25% = 225,000; cost of fulfilling 765,000 (IAS 37, para. 68A). Benefits: 40,000 × 18 = 720,000. Net cost of fulfilling: 765,000 − 720,000 = 45,000; indemnity: 30,000. Provision: the lower of the two, 30,000 (IAS 37, para. 68).","es":""},"common_error":{"fr":"","en":"Providing the net cost of fulfilling (45,000): the provision is the lower of the net cost of fulfilling and the exit penalty.","es":""},"format":"CALCULATION","data":[{"label":{"fr":"","en":"Expected benefits","es":""},"value":"720000","unit":"EUR"},{"label":{"fr":"","en":"Incremental costs","es":""},"value":"540000","unit":"EUR"},{"label":{"fr":"","en":"Allocated depreciation","es":""},"value":"225000","unit":"EUR"},{"label":{"fr":"","en":"Withdrawal indemnity","es":""},"value":"30000","unit":"EUR"}],"steps":[{"id":"S1","label":{"fr":"","en":"Cost of fulfilling","es":""},"answer":765000,"tolerance":0,"unit":"EUR"},{"id":"S2","label":{"fr":"","en":"Net cost of fulfilling","es":""},"answer":45000,"tolerance":0,"unit":"EUR"},{"id":"S3","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":30000,"tolerance":0,"unit":"EUR"}],"id":"P2","dimension":"CALCULATION","formula":{"lines":[{"step":"S2","meaning":{"fr":"","en":"Net cost of fulfilling","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"value":765000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Expected benefits","es":""},"value":720000,"unit":"EUR"}],"result":45000,"unit":"EUR"}],"references":["REF.IAS37.68","REF.IAS37.68A"]}},{"prompt":{"fr":"","en":"Which conclusion do you document?","es":""},"explanation":{"fr":"","en":"The cost of fulfilling (765,000) exceeds the benefits (720,000): the contract is onerous (IAS 37, para. 68). The provision is the least net cost of exiting, here the indemnity of 30,000 (reading adopted in this course); the allocation basis for the looms is a case assumption, documented.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Onerous contract; exiting is the least costly route: provision of 30,000","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"Onerous contract: provision of 45,000 for the net loss on fulfilling","es":""},"correct":false,"feedback":{"fr":"","en":"Exiting costs 30,000, less than the net loss on fulfilling: the provision is the lower of the two (IAS 37, para. 68).","es":""}},{"id":"C","text":{"fr":"","en":"No provision: the indemnity is lower than the contract price","es":""},"correct":false,"feedback":{"fr":"","en":"Comparing the indemnity with the gross cost of fulfilling or with the price is a mistake: the contract is onerous and exiting has a cost, which is provided for.","es":""}},{"id":"D","text":{"fr":"","en":"Onerous contract: provision of 80,000 including head-office costs","es":""},"correct":false,"feedback":{"fr":"","en":"Head-office costs do not relate directly to fulfilling the contract (IAS 37, para. 68A) and exiting remains less costly.","es":""}}],"id":"P3","dimension":"PROFESSIONAL_JUDGMENT"},{"prompt":{"fr":"","en":"Record the entry at 31 December N.","es":""},"explanation":{"fr":"","en":"Debit Onerous contract expense 30,000, credit Onerous contract provision 30,000 (IAS 37, para. 66). No prior impairment loss (IAS 36 test with no loss, IAS 37, para. 69).","es":""},"common_error":{"fr":"","en":"Providing 45,000 or expensing without a provision: the minimum exit cost (30,000) is recognised as a provision.","es":""},"format":"JOURNAL_ENTRY","accounts":[{"id":"ONEROUS_EXPENSE","text":{"fr":"","en":"Onerous contract expense","es":""}},{"id":"ONEROUS_PROVISION","text":{"fr":"","en":"Onerous contract provision","es":""}},{"id":"COST_OF_SALES","text":{"fr":"","en":"Cost of sales","es":""}},{"id":"PPE","text":{"fr":"","en":"Property, plant and equipment","es":""}}],"lines":[{"id":"L1","account":"ONEROUS_EXPENSE","side":"DEBIT","amount":30000},{"id":"L2","account":"ONEROUS_PROVISION","side":"CREDIT","amount":30000}],"id":"P4","dimension":"JOURNAL_ENTRY"}]},"scope":"CORE_STUDENT"},{"key":"LX.IAS37.000143","source":"V2","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","format":"ERROR_SPOT","context":"CHEMICALS","tested_point":"LEAST_NET_COST_GROSS_ERROR","difficulty":"ADVANCED","estimated_time_s":180,"lesson_id":"LS.IAS37.000010","review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"least-net-cost"},"references":["IAS 37 §66","IAS 37 §68","IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Kervala Chimie, a fictitious entity, must deliver solvents in N+1 at a fixed price (820,000); the cost of fulfilling calculated under para. 68A is 900,000; the contract allows an exit on payment of a penalty of 50,000 (case data). Spot the errors in the accountant's note.","es":""},"explanation":{"fr":"","en":"The contract is onerous if the cost of fulfilling exceeds the expected benefits. The provision is the least net cost of exiting: the lower of the net cost of fulfilling (80,000) and the penalty (50,000), i.e. 50,000 (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""},"format":"ERROR_SPOT","statements":[{"id":"S1","text":{"fr":"","en":"The cost of fulfilling (900,000) exceeds the price (820,000): the contract is onerous.","es":""},"erroneous":false},{"id":"S2","text":{"fr":"","en":"The unavoidable costs are the lower of 900,000 and 50,000, i.e. 50,000; this amount is below the price of 820,000, so there is no provision.","es":""},"erroneous":true,"correction":{"fr":"","en":"The penalty is compared with the net cost of fulfilling, 900,000 − 820,000 = 80,000, not with the gross cost of fulfilling; the provision is 50,000 (IAS 37, para. 68).","es":""}},{"id":"S3","text":{"fr":"","en":"Failing that, I would provide for the net loss on fulfilling of 80,000, out of prudence.","es":""},"erroneous":true,"correction":{"fr":"","en":"Exiting, at 50,000, is the least costly route: the provision is the lower of the two amounts, 50,000, not the worst scenario.","es":""}},{"id":"S4","text":{"fr":"","en":"The provision is recognised as an expense, with a provision in liabilities.","es":""},"erroneous":false}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000001","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE","IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000001","tested_point":"QST.IAS37.000001","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37","IAS 37 §85"],"exercise":{"prompt":{"fr":"","en":"The objective of IAS 37 is limited to setting recognition criteria for provisions; what the entity states in its notes about these items is governed entirely by other standards.","es":""},"explanation":{"fr":"","en":"The objective of IAS 37 covers both appropriate recognition criteria and measurement bases, and sufficient information in the notes to understand the nature, timing and amount of provisions and contingencies. The standard itself sets this information, for example a description of the nature of the obligation and of the expected timing of outflows for each class of provision (IAS 37, para. 85).","es":""},"common_error":{"fr":"","en":"Reducing IAS 37 to a recognition rule, with no measurement or disclosure.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000002","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE","IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000002","tested_point":"QST.IAS37.000002","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"IAS 37 seeks to ensure that appropriate measurement bases are applied not only to provisions but also to contingent liabilities and contingent assets.","es":""},"explanation":{"fr":"","en":"The objective targets the three categories of items: provisions, contingent liabilities and contingent assets, for their recognition, their measurement and the information provided. The scope of the standard covers the same three categories, subject to the exclusions it lists (IAS 37, para. 1).","es":""},"common_error":{"fr":"","en":"Thinking that IAS 37 deals only with items recognised in the statement of financial position.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000003","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE","IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000003","tested_point":"QST.IAS37.000003","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Which set of items does the objective of IAS 37 target?","es":""},"explanation":{"fr":"","en":"The objective concerns provisions, contingent liabilities and contingent assets; the scope of the standard covers these three categories (IAS 37, para. 1). Adjustments to asset values and income taxes fall under other rules.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provisions and impairments of assets.","es":""},"correct":false,"feedback":{"fr":"","en":"An impairment of an asset adjusts a carrying amount: it is not a provision under IAS 37.","es":""}},{"id":"B","text":{"fr":"","en":"Only the provisions recognised in the statement of financial position.","es":""},"correct":false,"feedback":{"fr":"","en":"Contingent liabilities and contingent assets, although not recognised, are within the objective.","es":""}},{"id":"C","text":{"fr":"","en":"Provisions, contingent liabilities and contingent assets.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Provisions and current or deferred income tax liabilities.","es":""},"correct":false,"feedback":{"fr":"","en":"Income tax falls under another standard, IAS 12.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000004","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.OBJECTIVE","IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000004","tested_point":"QST.IAS37.000004","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"objective"},"references":["IAS 37","IAS 37 §85"],"exercise":{"prompt":{"fr":"","en":"Under the objective of IAS 37, which aspects of provisions and contingencies should the notes enable users to understand?","es":""},"explanation":{"fr":"","en":"The objective requires sufficient information to understand the nature, timing and amount of provisions and contingencies. For provisions, the standard translates this into, among other things, a brief description of the nature of the obligation, the expected timing of outflows and the uncertainties (IAS 37, para. 85).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Their effect on the entity's share price.","es":""},"correct":false,"feedback":{"fr":"","en":"The objective does not target the effect on the share price.","es":""}},{"id":"B","text":{"fr":"","en":"Their nature, timing and amount.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The names of the persons to whom the amounts will be paid.","es":""},"correct":false,"feedback":{"fr":"","en":"The identity of the beneficiaries is not required by the objective.","es":""}},{"id":"D","text":{"fr":"","en":"The tax saving they provide.","es":""},"correct":false,"feedback":{"fr":"","en":"Tax consequences fall under IAS 12, not under the objective of IAS 37.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000005","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000005","tested_point":"QST.IAS37.000005","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"An executory contract that is not onerous is outside the scope of IAS 37.","es":""},"explanation":{"fr":"","en":"The standard excludes from its scope provisions, contingent liabilities and contingent assets resulting from executory contracts, except where the contract is onerous (IAS 37, para. 1). As long as it is not, no liability is recognised under IAS 37.","es":""},"common_error":{"fr":"","en":"Recognising provisions for all future contractual commitments, even profitable ones.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000006","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000006","tested_point":"QST.IAS37.000006","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"The \"provision for doubtful receivables\" account kept by Bramont is a provision as defined in IAS 37.","es":""},"explanation":{"fr":"","en":"Under IAS 37, a provision is a liability of uncertain timing or amount. The term is sometimes used for depreciation, impairment of assets or doubtful debts: these are adjustments to the carrying amounts of assets, which the standard does not deal with (IAS 37, para. 7).","es":""},"common_error":{"fr":"","en":"Relying on the name of an account rather than on its nature.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000007","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000007","tested_point":"QST.IAS37.000007","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"Which of these situations is an executory contract as described in IAS 37?","es":""},"explanation":{"fr":"","en":"An executory contract is one under which neither party has performed any of its obligations, or both parties have partially performed their obligations to an equal extent (IAS 37, para. 3). A firm order placed but neither delivered nor paid is the typical example.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A supply contract that the supplier has fully delivered and that the customer has not yet paid.","es":""},"correct":false,"feedback":{"fr":"","en":"The supplier has performed its part: the contract is no longer executory; it gives rise to a receivable and a payable.","es":""}},{"id":"B","text":{"fr":"","en":"A terminated contract whose penalties have already been paid.","es":""},"correct":false,"feedback":{"fr":"","en":"A terminated and settled contract no longer creates rights or obligations to perform.","es":""}},{"id":"C","text":{"fr":"","en":"A loan contract under which the entity has received the funds.","es":""},"correct":false,"feedback":{"fr":"","en":"The lender has performed its obligation; moreover, a loan is a financial instrument.","es":""}},{"id":"D","text":{"fr":"","en":"A firm order for materials for which no delivery and no payment have yet taken place.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000008","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000008","tested_point":"QST.IAS37.000008","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Calvérane has granted a guarantee that falls within the scope of IFRS 9. Which standard determines its accounting treatment?","es":""},"explanation":{"fr":"","en":"IAS 37 does not apply to financial instruments, including guarantees, that are within the scope of IFRS 9 (IAS 37, para. 2). The guarantee is therefore accounted for under IFRS 9 and not measured at the IAS 37 best estimate.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IFRS 9, since the guarantee falls within its scope.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"IAS 37, because every guarantee given creates a provision.","es":""},"correct":false,"feedback":{"fr":"","en":"A guarantee within the scope of IFRS 9 is expressly excluded from IAS 37.","es":""}},{"id":"C","text":{"fr":"","en":"IAS 37 for recognition and IFRS 9 for note disclosure only.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 does not apply at all to this instrument: the two standards do not share it.","es":""}},{"id":"D","text":{"fr":"","en":"None: a guarantee given is never accounted for.","es":""},"correct":false,"feedback":{"fr":"","en":"The question is not whether the guarantee is accounted for, but under which standard.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000009","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000009","tested_point":"QST.IAS37.000009","difficulty":"BEGINNER","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Which of these items fall under a standard other than IAS 37 that deals with that specific type of liability?","es":""},"explanation":{"fr":"","en":"Where another standard deals with a specific type of provision or contingency, the entity applies that standard: income taxes (IAS 12), employee benefits (IAS 19), contracts within the scope of IFRS 17, among others (IAS 37, para. 5). A warranty given to customers on products sold or a commercial dispute remains accounted for under IAS 37, unless another standard has a specific requirement.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A commercial dispute with a distributor.","es":""},"correct":false,"feedback":{"fr":"","en":"A commercial dispute is a classic case of a provision or contingent liability under IAS 37.","es":""}},{"id":"B","text":{"fr":"","en":"An uncertain income tax liability.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A defined benefit pension commitment to employees.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The restoration of land polluted by an accidental leak from the plant.","es":""},"correct":false,"feedback":{"fr":"","en":"An obligation to clean up damage caused falls under IAS 37.","es":""}},{"id":"E","text":{"fr":"","en":"An insurance contract issued within the scope of IFRS 17.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000010","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000010","tested_point":"QST.IAS37.000010","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A contract with a customer accounted for under IFRS 15 that becomes onerous falls under IAS 37 for the expected loss.","es":""},"explanation":{"fr":"","en":"Revenue from contracts with customers falls under IFRS 15, but IAS 37 applies to contracts with customers that are, or become, onerous, as IFRS 15 has no requirement on this point (IAS 37, para. 5).","es":""},"common_error":{"fr":"","en":"Setting IAS 37 aside because the contract falls under IFRS 15 for its revenue.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000011","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000011","tested_point":"QST.IAS37.000011","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Estrévia's trial balance includes an account named \"provision for depreciation of machinery\". How should it be classified under IAS 37?","es":""},"explanation":{"fr":"","en":"IAS 37 defines provisions as liabilities of uncertain timing or amount. Accumulated depreciation, even when locally called a \"provision\", is an adjustment to the carrying amount of an asset that the standard does not deal with (IAS 37, para. 7); it is presented as a deduction from machinery, not as a liability.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision to be presented as a liability, as its name states.","es":""},"correct":false,"feedback":{"fr":"","en":"The name does not determine the nature: there is no obligation towards a third party.","es":""}},{"id":"B","text":{"fr":"","en":"An adjustment to the carrying amount of the machinery, outside the scope of IAS 37.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A contingent liability to be disclosed in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"A contingent liability requires a possible or present obligation towards a third party, which is absent here.","es":""}},{"id":"D","text":{"fr":"","en":"A provision for the future replacement of the machinery, to be measured under IAS 37.","es":""},"correct":false,"feedback":{"fr":"","en":"The future replacement of the machinery is not a present obligation, and depreciation is not a provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000012","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000012","tested_point":"QST.IAS37.000012","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 1 October 20X5, Falcoris signs a lease of a warehouse with a commencement date of 1 March 20X6. In December 20X5, the loss of a customer makes this contract onerous. Which standard deals with this loss at the reporting date of 31 December 20X5?","es":""},"explanation":{"fr":"","en":"Leases fall under IFRS 16, but IAS 37 still applies to a lease that becomes onerous before its commencement date (IAS 37, para. 5). At the reporting date, the commencement date has not been reached: the loss falls under IAS 37.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IFRS 16, which deals with every aspect of a lease from signing.","es":""},"correct":false,"feedback":{"fr":"","en":"IFRS 16 leaves to IAS 37 a lease that is onerous before its commencement date.","es":""}},{"id":"B","text":{"fr":"","en":"IAS 37, because the lease becomes onerous before its commencement date.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"IAS 36, because the warehouse will be an impaired leased asset.","es":""},"correct":false,"feedback":{"fr":"","en":"No asset is recognised yet before the commencement date; the issue is the liability.","es":""}},{"id":"D","text":{"fr":"","en":"No standard: the loss will be recognised only from the commencement date.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 specifically deals with this loss before the commencement date.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000013","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000013","tested_point":"QST.IAS37.000013","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37","IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"Grenadel has firmly committed to buy 2,000 tonnes of wood pellets at the agreed fixed price, for delivery in 20X6; no delivery or payment has taken place at 31 December 20X5. The market price has risen slightly and the pellets will be resold at a margin. What should be concluded at the reporting date?","es":""},"explanation":{"fr":"","en":"Neither the supplier nor Grenadel has performed its obligations: the contract is executory (IAS 37, para. 3). Such a contract falls within the scope of IAS 37 only if it is onerous (IAS 37, para. 1); that is not the case here, since the pellets will be resold at a margin. No provision is recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for the full purchase commitment must be recognised.","es":""},"correct":false,"feedback":{"fr":"","en":"An executory contract that is not onerous gives rise to no provision under IAS 37.","es":""}},{"id":"B","text":{"fr":"","en":"A contingent liability must be disclosed for the purchase commitment.","es":""},"correct":false,"feedback":{"fr":"","en":"The contract is outside the scope of IAS 37: it is not a contingent liability under that standard.","es":""}},{"id":"C","text":{"fr":"","en":"The contract is executory and not onerous: it is outside the scope of IAS 37.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A contingent asset must be disclosed for the rise in the market price of pellets since signature.","es":""},"correct":false,"feedback":{"fr":"","en":"The potential gain on an executory contract is not a contingent asset as defined by the standard.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000014","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000014","tested_point":"QST.IAS37.000014","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37 §8"],"exercise":{"prompt":{"fr":"","en":"IAS 37 requires every cost recognised when a provision is set up to be expensed.","es":""},"explanation":{"fr":"","en":"Other standards determine whether an expenditure is recognised as an asset or as an expense; IAS 37 neither prohibits nor requires the capitalisation of the costs recognised when a provision is made (IAS 37, para. 8). The other side of the entry therefore depends on the standard that applies to the item concerned.","es":""},"common_error":{"fr":"","en":"Believing that a provision is always matched by an expense.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000015","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000015","tested_point":"QST.IAS37.000015","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Hautvane plans to discontinue a business that meets the definition of a discontinued operation. How do IAS 37 and IFRS 5 interact for the restructuring provision?","es":""},"explanation":{"fr":"","en":"IAS 37 applies to provisions for restructurings, including discontinued operations; when a restructuring meets the definition of a discontinued operation, IFRS 5 may require additional disclosures (IAS 37, para. 9).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IFRS 5 replaces IAS 37: no provision is recognised under IAS 37.","es":""},"correct":false,"feedback":{"fr":"","en":"IFRS 5 does not remove the restructuring provision from the scope of IAS 37.","es":""}},{"id":"B","text":{"fr":"","en":"IAS 37 applies only to restructurings without a discontinued operation.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard expressly covers restructurings that include discontinued operations.","es":""}},{"id":"C","text":{"fr":"","en":"IAS 37 applies to the provision; IFRS 5 may require additional disclosures.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The provision is measured under IFRS 5 and presented under IAS 37.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 sets the recognition and measurement of the provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000016","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000016","tested_point":"QST.IAS37.000016","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Ilmarée presents several accounts named \"provision\". Which of them correspond to a provision as defined in IAS 37?","es":""},"explanation":{"fr":"","en":"A provision under IAS 37 is a liability of uncertain timing or amount; depreciation, impairment of assets and doubtful debts, sometimes called \"provisions\", are adjustments to carrying amounts of assets that the standard does not deal with (IAS 37, para. 7). Only the obligation to repair products sold and the compensation probably owed to the former distributor are liabilities.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The \"provision\" for write-down of slow-moving inventories.","es":""},"correct":false,"feedback":{"fr":"","en":"This adjusts the value of an asset (inventories); it is not a liability.","es":""}},{"id":"B","text":{"fr":"","en":"The provision for warranty repairs on appliances sold during the year.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The \"provision\" for doubtful trade receivables.","es":""},"correct":false,"feedback":{"fr":"","en":"This adjusts the value of receivables, outside the scope of IAS 37.","es":""}},{"id":"D","text":{"fr":"","en":"The provision for the compensation Ilmarée will probably pay to a former distributor.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"The \"provision\" for the purchase of new software next year.","es":""},"correct":false,"feedback":{"fr":"","en":"A future purchase is not a present obligation: no liability exists.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000017","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000017","tested_point":"QST.IAS37.000017","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On acquiring Junivel, Lumaret undertakes to pay the seller an additional price if Junivel's revenue exceeds a threshold in 20X7. Under which standard does Lumaret account for this contingent additional price?","es":""},"explanation":{"fr":"","en":"Where another standard deals with a specific type of contingent liability, the entity applies that standard; contingent consideration of an acquirer in a business combination falls under IFRS 3 (IAS 37, para. 5). IAS 37 does not apply to this additional price.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IAS 37, because the payment depends on an uncertain future event.","es":""},"correct":false,"feedback":{"fr":"","en":"Another standard deals specifically with this type of item: IAS 37 gives way.","es":""}},{"id":"B","text":{"fr":"","en":"IFRS 15, because the additional price depends on revenue.","es":""},"correct":false,"feedback":{"fr":"","en":"Lumaret is not selling goods to a customer; revenue is merely a calculation indicator.","es":""}},{"id":"C","text":{"fr":"","en":"IAS 37 for measurement and IFRS 3 for disclosure.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 does not apply at all to this item dealt with by IFRS 3.","es":""}},{"id":"D","text":{"fr":"","en":"IFRS 3, which deals with the contingent consideration of an acquirer.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000018","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000018","tested_point":"QST.IAS37.000018","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Novélia measures its uncertain income tax for the year under IAS 37.","es":""},"explanation":{"fr":"","en":"IAS 37 gives way where another standard deals with a specific type of provision; this is the case for income taxes, dealt with by IAS 12 (IAS 37, para. 5).","es":""},"common_error":{"fr":"","en":"Applying IAS 37 to every uncertain liability, whatever its nature.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000019","standard_id":"IAS37","concept_ids":["IAS37.SCOPE.GENERAL"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000019","tested_point":"QST.IAS37.000019","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Orsalis leases a storage unit for 10 months; it has elected to account for this short-term lease under paragraph 6 of IFRS 16, as an expense of the period. Following the discontinuation of a product range, the unit is empty and the contract has become onerous. Which standard deals with this situation?","es":""},"explanation":{"fr":"","en":"IAS 37 still applies to short-term leases and leases of low-value assets accounted for under paragraph 6 of IFRS 16 that become onerous (IAS 37, para. 5). Orsalis therefore assesses the onerous contract provision under IAS 37.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"IFRS 16 alone, as every lease falls under it.","es":""},"correct":false,"feedback":{"fr":"","en":"IFRS 16 leaves this short-term lease that has become onerous to IAS 37.","es":""}},{"id":"B","text":{"fr":"","en":"IAS 37, which applies to this short-term lease that has become onerous.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"IAS 2, because the unit was used to store goods.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 2 deals with inventories, not with the lease of the unit.","es":""}},{"id":"D","text":{"fr":"","en":"None: future lease payments are simply expensed as they fall due.","es":""},"correct":false,"feedback":{"fr":"","en":"The expected loss on an onerous contract must be assessed under IAS 37.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000020","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000020","tested_point":"QST.IAS37.000020","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Under IAS 37, a provision is a liability of uncertain timing or amount.","es":""},"explanation":{"fr":"","en":"The IAS 37 definition makes the provision a category of liability, characterised by uncertainty about its timing or its amount (IAS 37, para. 10). It therefore first requires a present obligation arising from past events.","es":""},"common_error":{"fr":"","en":"Seeing a provision as a mere appropriation of profits.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000021","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000021","tested_point":"QST.IAS37.000021","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Which statement best describes an obligating event under IAS 37?","es":""},"explanation":{"fr":"","en":"An obligating event is an event that creates a legal or constructive obligation that leaves the entity with no realistic alternative to settling it (IAS 37, para. 10).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Management's internal decision to incur expenditure next year.","es":""},"correct":false,"feedback":{"fr":"","en":"An internal decision that has not been communicated does not bind the entity towards third parties.","es":""}},{"id":"B","text":{"fr":"","en":"An event that creates a legal or constructive obligation that the entity cannot realistically avoid settling.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The date on which the entity pays the amount due.","es":""},"correct":false,"feedback":{"fr":"","en":"Payment settles the obligation; it does not create it.","es":""}},{"id":"D","text":{"fr":"","en":"Any event that reduces profit for the year.","es":""},"correct":false,"feedback":{"fr":"","en":"An expense does not always involve an obligation towards a third party.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000022","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000022","tested_point":"QST.IAS37.000022","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"A constructive obligation can arise only from a signed contract or a piece of legislation.","es":""},"explanation":{"fr":"","en":"An obligation arising from a contract or legislation is a legal obligation. A constructive obligation arises from the entity's actions: through its past practice, published policies or a sufficiently specific recent statement, it has indicated that it will accept certain responsibilities and has thus created a valid expectation in other parties (IAS 37, para. 10).","es":""},"common_error":{"fr":"","en":"Confusing a constructive obligation with a legal obligation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000023","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000023","tested_point":"QST.IAS37.000023","difficulty":"BEGINNER","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"Which of these sources give rise to a legal obligation under IAS 37?","es":""},"explanation":{"fr":"","en":"A legal obligation derives from a contract, legislation or another operation of law (IAS 37, para. 10). A consistent past practice or a published policy may create a constructive obligation, which is not a legal obligation.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A packaging take-back policy published on the entity's website.","es":""},"correct":false,"feedback":{"fr":"","en":"A published policy may create a constructive obligation, not a legal one.","es":""}},{"id":"B","text":{"fr":"","en":"The terms of a sales contract concluded with a customer.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The practice, followed for ten years, of compensating dissatisfied customers.","es":""},"correct":false,"feedback":{"fr":"","en":"A past practice may create a constructive obligation, not a legal one.","es":""}},{"id":"D","text":{"fr":"","en":"A law requiring the clean-up of certain sites.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"A court ruling handed down under a legal provision.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000024","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000024","tested_point":"QST.IAS37.000024","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §11"],"exercise":{"prompt":{"fr":"","en":"In December, Pellicor received and accepted an invoice of 18,400 for parts delivered, payable in February. How should this amount be classified at the reporting date?","es":""},"explanation":{"fr":"","en":"Trade payables relate to goods or services received that have been invoiced or formally agreed with the supplier; their amount and timing do not involve the uncertainty that characterises a provision (IAS 37, para. 11).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision, because payment will occur after the reporting date.","es":""},"correct":false,"feedback":{"fr":"","en":"A future payment is not enough: timing and amount are known here.","es":""}},{"id":"B","text":{"fr":"","en":"A contingent liability, because the payment is in the future.","es":""},"correct":false,"feedback":{"fr":"","en":"The liability exists and its amount is known: nothing is contingent.","es":""}},{"id":"C","text":{"fr":"","en":"A trade payable.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"An estimated accrual.","es":""},"correct":false,"feedback":{"fr":"","en":"The invoice has been received: this is no longer an accrual but a trade payable.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000025","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000025","tested_point":"QST.IAS37.000025","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §11"],"exercise":{"prompt":{"fr":"","en":"An accrual may require an estimate, but the uncertainty surrounding it is generally much less than for a provision.","es":""},"explanation":{"fr":"","en":"Accruals relate to goods or services received but not paid, invoiced or formally agreed; an estimate is sometimes needed, but the uncertainty is generally much less than for a provision (IAS 37, para. 11).","es":""},"common_error":{"fr":"","en":"Classifying as a provision any liability whose exact amount has not yet been invoiced.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000026","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000026","tested_point":"QST.IAS37.000026","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §11"],"exercise":{"prompt":{"fr":"","en":"A consulting firm completed an engagement for Quintane in December at the agreed hourly rate; the hours are known, but the invoice of 7,350 will arrive only in January. How does Quintane present this amount at the reporting date?","es":""},"explanation":{"fr":"","en":"The service has been received but neither invoiced nor paid: it is an accrual. The estimate relies on known hours and rate, and the uncertainty is much less than for a provision (IAS 37, para. 11). Presenting it as a provision would artificially inflate provisions.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As a provision, because the invoice has not been received.","es":""},"correct":false,"feedback":{"fr":"","en":"The absence of an invoice does not create provision-level uncertainty: amount and timing are almost known.","es":""}},{"id":"B","text":{"fr":"","en":"As an accrual, within payables.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"As a contingent liability disclosed in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation is present and certain: it is not a contingent liability.","es":""}},{"id":"D","text":{"fr":"","en":"Nowhere: the expense will be recognised on receipt of the invoice in January.","es":""},"correct":false,"feedback":{"fr":"","en":"The service was received in December: the expense and the liability relate to this period.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000027","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000027","tested_point":"QST.IAS37.000027","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §13"],"exercise":{"prompt":{"fr":"","en":"A contingent liability is recognised as a liability as soon as its amount is material.","es":""},"explanation":{"fr":"","en":"The standard distinguishes provisions, recognised as liabilities, from contingent liabilities, which are not recognised because they are either possible obligations or present obligations that do not meet the recognition criteria (IAS 37, para. 13). Materiality of the amount does not change this classification.","es":""},"common_error":{"fr":"","en":"Confusing the size of the amount with a recognition criterion.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000028","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000028","tested_point":"QST.IAS37.000028","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10","IAS 37 §13"],"exercise":{"prompt":{"fr":"","en":"Which of these situations correspond to a contingent liability?","es":""},"explanation":{"fr":"","en":"A contingent liability is either a possible obligation whose existence depends on uncertain future events not wholly within the entity's control, or a present obligation that is not recognised because an outflow is not probable or cannot be measured with sufficient reliability (IAS 37, para. 10). A present obligation with a probable outflow that can be reliably estimated is a provision (IAS 37, para. 13).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A present obligation whose outflow is probable and whose amount can be reliably estimated.","es":""},"correct":false,"feedback":{"fr":"","en":"All three criteria are met: this is a provision, which is recognised.","es":""}},{"id":"B","text":{"fr":"","en":"A possible obligation whose existence depends on the outcome of a future investigation.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A present obligation for which an outflow of resources is not probable.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A present obligation whose amount, in an extremely rare case, cannot be reliably estimated.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000029","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000029","tested_point":"QST.IAS37.000029","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"All provisions involve some uncertainty. Why, then, does IAS 37 not describe them as \"contingent\"?","es":""},"explanation":{"fr":"","en":"In a general sense, every provision is contingent because it is uncertain; however, the standard reserves the word \"contingent\" for liabilities and assets that are not recognised because their existence depends on uncertain future events not wholly within the entity's control, and the term \"contingent liability\" for liabilities that do not meet the recognition criteria (IAS 37, para. 12).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Because provisions always have a certain amount.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision is precisely uncertain as to its timing or amount.","es":""}},{"id":"B","text":{"fr":"","en":"Because \"contingent\" refers only to immaterial amounts.","es":""},"correct":false,"feedback":{"fr":"","en":"The term does not refer to the amount but to the unrecognised nature of the item.","es":""}},{"id":"C","text":{"fr":"","en":"Because the standard reserves \"contingent\" for unrecognised items whose existence depends on uncertain future events.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Because a provision can never be revised.","es":""},"correct":false,"feedback":{"fr":"","en":"Provisions are reviewed at each reporting date; this is unrelated to the word \"contingent\".","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000031","standard_id":"IAS37","concept_ids":["IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000031","tested_point":"QST.IAS37.000031","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10"],"exercise":{"prompt":{"fr":"","en":"On 20 December, Talvène's board decides, in a meeting, to refund dissatisfied customers in future beyond its contractual obligations. Nothing has been announced externally and this was not a practice of the company. Is there a constructive obligation at the reporting date of 31 December?","es":""},"explanation":{"fr":"","en":"A constructive obligation requires the entity to have indicated to others, through past practice, published policies or a sufficiently specific statement, that it will accept these responsibilities, creating a valid expectation on their part (IAS 37, para. 10). An internal decision that has not been communicated creates no expectation in customers.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, because the board's decision binds the company as soon as it is taken.","es":""},"correct":false,"feedback":{"fr":"","en":"An internal decision can still be changed and has not been brought to the attention of customers.","es":""}},{"id":"B","text":{"fr":"","en":"Yes, because the refund is probable since the board voted for it.","es":""},"correct":false,"feedback":{"fr":"","en":"The probability of an outflow does not replace the existence of an obligation towards others.","es":""}},{"id":"C","text":{"fr":"","en":"No, because no valid expectation has been created in customers.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"No, because only a legal obligation can justify a provision.","es":""},"correct":false,"feedback":{"fr":"","en":"A constructive obligation can also justify a provision; it is its absence that is at issue here.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000033","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000033","tested_point":"QST.IAS37.000033","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14"],"exercise":{"prompt":{"fr":"","en":"A provision is recognised as soon as two of the three IAS 37 recognition conditions are met.","es":""},"explanation":{"fr":"","en":"A provision is recognised if, and only if, all three conditions are met: a present obligation arising from a past event, a probable outflow of resources and a reliable estimate of the amount (IAS 37, para. 14). The conditions are cumulative.","es":""},"common_error":{"fr":"","en":"Recognising a provision without a present obligation because the expenditure is probable.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000034","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000034","tested_point":"QST.IAS37.000034","difficulty":"BEGINNER","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14"],"exercise":{"prompt":{"fr":"","en":"Which conditions must be met to recognise a provision?","es":""},"explanation":{"fr":"","en":"The three cumulative conditions are: a present obligation, legal or constructive, arising from a past event; a probable outflow of resources embodying economic benefits to settle it; a reliable estimate of its amount (IAS 37, para. 14). Neither shareholders' approval nor exact knowledge of the payment date is required.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Approval of the provision by the shareholders' meeting.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 37 does not require any shareholders' approval.","es":""}},{"id":"B","text":{"fr":"","en":"A present obligation arising from a past event.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Exact knowledge of the payment date.","es":""},"correct":false,"feedback":{"fr":"","en":"Timing may be uncertain: this is even a feature of a provision.","es":""}},{"id":"D","text":{"fr":"","en":"A probable outflow of resources to settle the obligation.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"A reliable estimate of the amount of the obligation.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000035","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000035","tested_point":"QST.IAS37.000035","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §23"],"exercise":{"prompt":{"fr":"","en":"Under IAS 37, when is an outflow of resources \"probable\"?","es":""},"explanation":{"fr":"","en":"An outflow of resources is regarded as probable when it is more likely than not to occur, that is, when the probability that it will occur is greater than the probability that it will not (IAS 37, para. 23).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"When it is virtually certain.","es":""},"correct":false,"feedback":{"fr":"","en":"\"Virtually certain\" is the threshold for recognising an asset, not the threshold for a probable outflow.","es":""}},{"id":"B","text":{"fr":"","en":"When it is more likely than not.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"When it is not remote.","es":""},"correct":false,"feedback":{"fr":"","en":"An outflow that is not remote may be merely possible: it then leads to a contingent liability.","es":""}},{"id":"D","text":{"fr":"","en":"When an expert considers it at least possible.","es":""},"correct":false,"feedback":{"fr":"","en":"A merely possible outflow does not reach the probability threshold.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000036","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000036","tested_point":"QST.IAS37.000036","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §23"],"exercise":{"prompt":{"fr":"","en":"When an outflow of resources is not probable, the entity discloses a contingent liability, unless the possibility of an outflow is remote.","es":""},"explanation":{"fr":"","en":"Without a probable outflow, no provision is recognised; the entity discloses a contingent liability, unless the possibility of an outflow is remote (IAS 37, para. 23).","es":""},"common_error":{"fr":"","en":"Disclosing nothing when the outflow is merely possible.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000039","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000039","tested_point":"QST.IAS37.000039","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §24"],"exercise":{"prompt":{"fr":"","en":"Wexhal sells thousands of radiators each year with a two-year warranty; for each radiator taken individually, the probability of a repair is low. How should it assess whether an outflow of resources is probable?","es":""},"explanation":{"fr":"","en":"For a number of similar obligations such as product warranties, the probability of an outflow is assessed for the class as a whole: even if it is low for each item, an outflow may be probable for the class (IAS 37, para. 24).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Radiator by radiator: no provision, since each probability is low.","es":""},"correct":false,"feedback":{"fr":"","en":"Reasoning item by item ignores that repairs are expected across all sales.","es":""}},{"id":"B","text":{"fr":"","en":"Across all the warranties, considered as a single class of obligations.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Only on the radiators that have already been the subject of a claim.","es":""},"correct":false,"feedback":{"fr":"","en":"Future repairs on the radiators sold are also part of the obligation.","es":""}},{"id":"D","text":{"fr":"","en":"By drawing a sample of ten radiators, the conclusion for the sample applying to all.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard does not provide for sampling: it targets the class as a whole.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000040","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000040","tested_point":"QST.IAS37.000040","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14","IAS 37 §24"],"exercise":{"prompt":{"fr":"","en":"Xandrel sold 4,000 scooters in 20X5 with a one-year contractual warranty. Based on its history, each scooter has a 3% chance of needing a repair. What does Xandrel conclude at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"The sale under warranty (past event) creates a present obligation. Taken as a whole, the class of 4,000 warranties suggests about 120 repairs: the outflow is probable for the class (IAS 37, para. 24), and history allows a reliable estimate; all three conditions are met (IAS 37, para. 14).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision: 3% is too low a probability for each scooter.","es":""},"correct":false,"feedback":{"fr":"","en":"Probability is not assessed scooter by scooter but for the class as a whole.","es":""}},{"id":"B","text":{"fr":"","en":"No provision until a claim has been received.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation arises from the sale under warranty, not from the claim.","es":""}},{"id":"C","text":{"fr":"","en":"A provision, the outflow being probable for the class of warranties as a whole.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A contingent liability disclosed in the notes, since each repair taken individually is merely possible.","es":""},"correct":false,"feedback":{"fr":"","en":"Item-by-item reasoning wrongly leads to a contingent liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000041","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000041","tested_point":"QST.IAS37.000041","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §25","IAS 37"],"exercise":{"prompt":{"fr":"","en":"When the amount of a present obligation is uncertain, the entity refrains from recognising a provision and only discloses it in the notes.","es":""},"explanation":{"fr":"","en":"The use of estimates is inherent in provisions: except in extremely rare cases, the entity can determine a range of possible outcomes and therefore a sufficiently reliable estimate (IAS 37, para. 25). Only the extremely rare impossibility of any reliable estimate leads to disclosure of a contingent liability (IAS 37, para. 26).","es":""},"common_error":{"fr":"","en":"Giving up on a provision for lack of an exact amount.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000042","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000042","tested_point":"QST.IAS37.000042","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"In an extremely rare case, a present obligation exists and the outflow is probable, but no reliable estimate of its amount is possible. What is the treatment?","es":""},"explanation":{"fr":"","en":"In this extremely rare case, a liability exists that cannot be recognised; it is disclosed as a contingent liability (IAS 37, para. 26).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for a token amount.","es":""},"correct":false,"feedback":{"fr":"","en":"A token amount would not be a reliable estimate of the obligation.","es":""}},{"id":"B","text":{"fr":"","en":"A provision for the highest conceivable amount.","es":""},"correct":false,"feedback":{"fr":"","en":"Taking the maximum is not a reliable estimate and would lead to an excessive provision.","es":""}},{"id":"C","text":{"fr":"","en":"No recognition; the liability is disclosed as a contingent liability.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Neither recognition nor disclosure, for lack of an amount.","es":""},"correct":false,"feedback":{"fr":"","en":"The lack of a reliable amount does not permit silence: disclosure is required.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000043","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000043","tested_point":"QST.IAS37.000043","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14","IAS 37 §25","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Zorvane is being sued by a distributor it removed. Its lawyers consider an adverse ruling probable, with damages of between 300,000 and 500,000 depending on the court's assessment of the loss. The finance director proposes to recognise nothing \"for lack of a reliable amount\". What should be concluded?","es":""},"explanation":{"fr":"","en":"A present obligation exists and the outflow is probable. The existence of a range of outcomes shows that a sufficiently reliable estimate is possible: the inability to estimate is extremely rare (IAS 37, para. 25; IAS 37, para. 26). All three conditions are met: Zorvane recognises a provision measured at the best estimate (IAS 37, para. 14).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Recognise nothing and disclose a contingent liability, as the damages are not known.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty about the amount is not an inability to make a reliable estimate.","es":""}},{"id":"B","text":{"fr":"","en":"Recognise a provision, since a range of outcomes allows a reliable estimate.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Recognise a provision of 500,000 out of prudence, then reduce it after the judgment.","es":""},"correct":false,"feedback":{"fr":"","en":"The provision is the best estimate, not the top of the range chosen out of prudence.","es":""}},{"id":"D","text":{"fr":"","en":"Wait for the judgment to decide whether an obligation exists.","es":""},"correct":false,"feedback":{"fr":"","en":"The existence of the obligation is assessed at the reporting date with the available evidence.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000044","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000044","tested_point":"QST.IAS37.000044","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14"],"exercise":{"prompt":{"fr":"","en":"Corvessa owes probable compensation of 64,000 to a customer for a delivery delay that occurred in 20X5; the three recognition conditions are met. The accountant recorded: debit retained earnings (equity) 64,000, credit provision 64,000. Where is the error?","es":""},"explanation":{"fr":"","en":"As the conditions are met, a provision of 64,000 is recognised (IAS 37, para. 14). The other side of the entry is an expense of the period, unless another standard requires it to be included in an asset: nothing here justifies charging equity directly.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The amount: the provision should have been discounted, as payment is due in three months.","es":""},"correct":false,"feedback":{"fr":"","en":"For a payment in three months, the effect of discounting is generally not material; this is not the error described.","es":""}},{"id":"B","text":{"fr":"","en":"The existence of the provision: compensation for delay is only a contingent liability.","es":""},"correct":false,"feedback":{"fr":"","en":"As the three conditions are met, a provision must indeed be recognised.","es":""}},{"id":"C","text":{"fr":"","en":"The other side of the entry: the provision should have been charged as an expense of the period, not to equity.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The amount: twice the compensation should have been provided for out of prudence.","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not justify an excessive provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000045","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000045","tested_point":"QST.IAS37.000045","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §24"],"exercise":{"prompt":{"fr":"","en":"Dalmeri sold 25,000 coffee makers with a one-year warranty. Its controller concludes: \"Each coffee maker has only a 2% risk of failure; no outflow is probable, so no provision.\" What is the error in reasoning?","es":""},"explanation":{"fr":"","en":"For many similar obligations such as warranties, the probability of an outflow is assessed for the class as a whole (IAS 37, para. 24). Out of 25,000 coffee makers, about 500 repairs are expected: an outflow is probable for the class, even if it is low for each coffee maker.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The 2% failure rate is miscalculated.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate is not at issue: the level at which probability is assessed is.","es":""}},{"id":"B","text":{"fr":"","en":"Probability should have been assessed across all the warranties, not coffee maker by coffee maker.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A one-year warranty is too short to create an obligation.","es":""},"correct":false,"feedback":{"fr":"","en":"The length of the warranty does not prevent the obligation arising from the sale.","es":""}},{"id":"D","text":{"fr":"","en":"Future failures are future operating losses, for which no provision is allowed.","es":""},"correct":false,"feedback":{"fr":"","en":"Warranty repairs result from past sales: they are not future operating losses.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000046","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.CRITERIA"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000046","tested_point":"QST.IAS37.000046","difficulty":"ADVANCED","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14","IAS 37 §23"],"exercise":{"prompt":{"fr":"","en":"For five separate present obligations of Elvarin, all of which can be reliably estimated, the probability of an outflow of resources is estimated as follows. Which give rise to a provision?","es":""},"explanation":{"fr":"","en":"A provision is recognised only if the outflow is probable, that is, more likely than not (IAS 37, para. 23), the other conditions being met (IAS 37, para. 14). A probability of 55% or 70% exceeds this threshold; a probability of 50% does not: it is then a contingent liability, as at 40% or 15% (unless the outflow is remote).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Obligation A: 40% probability of an outflow.","es":""},"correct":false,"feedback":{"fr":"","en":"40% remains below the \"more likely than not\" threshold.","es":""}},{"id":"B","text":{"fr":"","en":"Obligation B: 55% probability of an outflow.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Obligation C: 15% probability of an outflow.","es":""},"correct":false,"feedback":{"fr":"","en":"15% is far from the threshold; the outflow may be remote or merely possible.","es":""}},{"id":"D","text":{"fr":"","en":"Obligation D: 70% probability of an outflow.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"Obligation E: 50% probability of an outflow.","es":""},"correct":false,"feedback":{"fr":"","en":"At 50%, the outflow is not more likely than not: no provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000047","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000047","tested_point":"QST.IAS37.000047","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §15"],"exercise":{"prompt":{"fr":"","en":"When it is not clear whether there is a present obligation, a past event is deemed to give rise to a present obligation if, taking account of all available evidence, it is more likely than not that one exists at the reporting date.","es":""},"explanation":{"fr":"","en":"In the rare cases where the existence of a present obligation is unclear, the standard uses the \"more likely than not\" threshold, assessed on all the evidence available at the reporting date (IAS 37, para. 15).","es":""},"common_error":{"fr":"","en":"Requiring absolute certainty about the existence of the obligation before recognising a provision.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000048","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000048","tested_point":"QST.IAS37.000048","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"To assess whether a lawsuit creates a present obligation at the reporting date, which evidence does the entity take into account?","es":""},"explanation":{"fr":"","en":"Where there is doubt, the entity assesses the existence of the obligation on all available evidence, including the opinion of experts and any additional evidence provided by events after the reporting period (IAS 37, para. 16).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Only management's opinion at the reporting date.","es":""},"correct":false,"feedback":{"fr":"","en":"Management's opinion is not enough: all available evidence is taken into account.","es":""}},{"id":"B","text":{"fr":"","en":"Only final judgments handed down before the reporting date.","es":""},"correct":false,"feedback":{"fr":"","en":"Waiting for a final judgment would ignore the other evidence.","es":""}},{"id":"C","text":{"fr":"","en":"Only the evidence known on the reporting date, excluding any later event and any outside opinion.","es":""},"correct":false,"feedback":{"fr":"","en":"Events after the reporting period that shed light on the position at the reporting date are taken into account.","es":""}},{"id":"D","text":{"fr":"","en":"All available evidence, including expert opinion and events after the reporting period.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000049","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","context":"V1_VG.IAS37.000002","tested_point":"VG.IAS37.000002","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"A supplier is claiming penalties from Fontrel for breach of a supply contract. At the reporting date, Fontrel disputes the claim; its lawyers nevertheless consider it more likely than not that the court will find a wrongful breach, and the penalties can be reliably estimated. Payment would then be probable. What does Fontrel conclude?","es":""},"explanation":{"fr":"","en":"The existence of the obligation is assessed on all available evidence, including the lawyers' opinion; when it is more likely than not that a present obligation exists and the criteria are met, a provision is recognised (IAS 37, para. 16).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision as long as Fontrel disputes the claim.","es":""},"correct":false,"feedback":{"fr":"","en":"The entity's dispute does not prevent the obligation from being more likely than not.","es":""}},{"id":"B","text":{"fr":"","en":"A provision, the present obligation being more likely than not and the criteria met.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Disclosure as a contingent liability only, a lawsuit being contingent by nature.","es":""},"correct":false,"feedback":{"fr":"","en":"A lawsuit can lead to a provision when the obligation is more likely than not.","es":""}},{"id":"D","text":{"fr":"","en":"No provision until the judgment is final.","es":""},"correct":false,"feedback":{"fr":"","en":"The existence of the obligation is assessed at the reporting date, without waiting for the judgment.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000050","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","context":"V1_VG.IAS37.000002","tested_point":"VG.IAS37.000002","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"Local residents are suing Gavrelle, which they accuse of causing cracks in their houses during works. The appointed experts conclude that it is more likely than not that the cracks come from natural ground movement; a risk of an adverse ruling remains, without being remote. What does Gavrelle conclude at the reporting date?","es":""},"explanation":{"fr":"","en":"If, on all available evidence including the experts' opinion, it is more likely than not that no present obligation exists, the entity recognises no provision; it discloses a contingent liability unless the outflow is remote, which is not the case here (IAS 37, para. 16).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for all the repairs claimed, out of prudence.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation is not more likely than not: prudence does not justify a provision.","es":""}},{"id":"B","text":{"fr":"","en":"Neither a provision nor disclosure, the experts having ruled out its liability.","es":""},"correct":false,"feedback":{"fr":"","en":"As the risk is not remote, disclosure as a contingent liability is still required.","es":""}},{"id":"C","text":{"fr":"","en":"No provision, but disclosure of a contingent liability.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A provision equal to half the repairs, the risk being shared.","es":""},"correct":false,"feedback":{"fr":"","en":"No sharing of liability has been established; a provision is not a compromise.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000051","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000051","tested_point":"QST.IAS37.000051","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"Fines incurred for illegal pollution already caused may give rise to a provision, because the obligation exists independently of the entity's future actions.","es":""},"explanation":{"fr":"","en":"Only obligations arising from past events and existing independently of the future conduct of the business are recognised as provisions; fines or clean-up costs for unlawful environmental damage are the example (IAS 37, para. 19).","es":""},"common_error":{"fr":"","en":"Confusing a penalty for past damage with a future operating cost.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000052","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000052","tested_point":"QST.IAS37.000052","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"A new regulation requires Brisaco to fit its paint shop with a soundproofing system by 20X7 if it wants to keep operating it. At the 20X5 reporting date, nothing has been installed. Should Brisaco recognise a provision for the cost of the installation?","es":""},"explanation":{"fr":"","en":"An expenditure that the entity must incur to operate in a particular way in the future can be avoided by its future actions (changing process, relocating or closing the shop): there is no present obligation and no provision is recognised (IAS 37, para. 19).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, because the regulation has already been adopted.","es":""},"correct":false,"feedback":{"fr":"","en":"The adoption of the regulation is not enough: the obligation depends on continuing operations.","es":""}},{"id":"B","text":{"fr":"","en":"Yes, for the discounted cost of the system to be installed in 20X7.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting does not change the absence of a present obligation.","es":""}},{"id":"C","text":{"fr":"","en":"No, because Brisaco can avoid the expenditure by its future actions, for example by ceasing to operate the shop.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"No, because the amount of the installation is not yet known precisely.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty about the amount is not the reason: the absence of a present obligation is.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000053","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000053","tested_point":"QST.IAS37.000053","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §18","IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"Celtane is reviewing five expenditures at its reporting date. Which correspond to a present obligation that may give rise to a provision?","es":""},"explanation":{"fr":"","en":"Financial statements depict the position at the reporting date: no provision is recognised for costs that need to be incurred to operate in the future (IAS 37, para. 18). Only obligations that exist independently of the entity's future actions are recognised as provisions, such as cleaning up unlawful damage already caused or decommissioning an installation to the extent damage has already been caused (IAS 37, para. 19).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Routine servicing of the boilers planned for next year.","es":""},"correct":false,"feedback":{"fr":"","en":"Future servicing is a future, avoidable operating cost: no present obligation.","es":""}},{"id":"B","text":{"fr":"","en":"Cleaning up land illegally contaminated by a leak that occurred in 20X5.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Training staff on the new management software.","es":""},"correct":false,"feedback":{"fr":"","en":"Future training relates to the future conduct of the business.","es":""}},{"id":"D","text":{"fr":"","en":"Decommissioning, at the end of operations, an installation already built whose decommissioning is required by law.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"Buying filters that will become mandatory to continue operating in 20X8.","es":""},"correct":false,"feedback":{"fr":"","en":"These filters are a condition for future operations: the expenditure remains avoidable.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000054","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000054","tested_point":"QST.IAS37.000054","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §18"],"exercise":{"prompt":{"fr":"","en":"Durmanel may recognise a provision this year for the costs it will have to incur next year to keep operating its plant.","es":""},"explanation":{"fr":"","en":"Financial statements deal with the position of the entity at the reporting date, not its possible future position: no provision is recognised for costs that need to be incurred to operate in the future (IAS 37, para. 18).","es":""},"common_error":{"fr":"","en":"Smoothing future expenses through provisions.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000055","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000055","tested_point":"QST.IAS37.000055","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 18 December 20X5, Ferlac's board decides to provide free replacement of a series of water heaters, beyond the warranty. The customers concerned are informed only by a letter dated 12 January 20X6. Is there a constructive obligation at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"A management or board decision creates a constructive obligation at the reporting date only if it has been communicated before that date to those affected in a sufficiently specific manner to raise a valid expectation (IAS 37, para. 20). Here, the communication takes place after the reporting date.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, as from the board's decision of 18 December.","es":""},"correct":false,"feedback":{"fr":"","en":"The board's decision alone does not create any expectation in customers.","es":""}},{"id":"B","text":{"fr":"","en":"No, because the decision was not communicated to customers before the reporting date.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Yes, because the letter of 12 January has retroactive effect to the date of the decision.","es":""},"correct":false,"feedback":{"fr":"","en":"The January communication does not retroactively create an expectation at 31 December.","es":""}},{"id":"D","text":{"fr":"","en":"No, because only a legal obligation can arise from a free replacement.","es":""},"correct":false,"feedback":{"fr":"","en":"A voluntary undertaking can create a constructive obligation; the date of communication is the problem.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000056","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000056","tested_point":"QST.IAS37.000056","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Galvane's accountant recognised a provision of 210,000 for a buy-back programme for defective products, supported only by the minutes of the executive committee of 28 December approving the programme. No announcement has been made to customers or distributors. What is the error?","es":""},"explanation":{"fr":"","en":"An internal decision does not create a constructive obligation at the reporting date if it has not been communicated to those affected before that date in a sufficiently specific manner (IAS 37, para. 20). Without a present obligation, the provision should not have been recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The amount of 210,000 should have been discounted.","es":""},"correct":false,"feedback":{"fr":"","en":"The amount is not an issue as long as the obligation does not exist.","es":""}},{"id":"B","text":{"fr":"","en":"The provision should have been presented as a trade payable.","es":""},"correct":false,"feedback":{"fr":"","en":"Classification is not at issue: the very existence of the liability is.","es":""}},{"id":"C","text":{"fr":"","en":"The provision should have been doubled to cover the distributors.","es":""},"correct":false,"feedback":{"fr":"","en":"Nothing supports such an amount, and the obligation does not exist.","es":""}},{"id":"D","text":{"fr":"","en":"No obligation exists at the reporting date: the decision was not communicated to those affected.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000057","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000057","tested_point":"QST.IAS37.000057","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"An obligation exists under IAS 37 only if the entity knows the precise identity of the party to which it is bound.","es":""},"explanation":{"fr":"","en":"An obligation always involves another party, but its identity may remain unknown: the obligation may be owed to the public at large (IAS 37, para. 20).","es":""},"common_error":{"fr":"","en":"Dismissing an environmental obligation because no creditor has been identified.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000058","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000058","tested_point":"QST.IAS37.000058","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Between 20X1 and 20X4, Haldric stored waste on its land, which the law then allowed. In November 20X5, a law is enacted requiring operators to clean up land contaminated in this way. When does Haldric's clean-up obligation arise?","es":""},"explanation":{"fr":"","en":"An event that does not give rise to an obligation immediately may do so later because of a change in the law: environmental damage becomes an obligating event when a new law requires it to be rectified (IAS 37, para. 21). The obligation therefore arises in November 20X5.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"In 20X1, from the first storage of waste.","es":""},"correct":false,"feedback":{"fr":"","en":"The storage was lawful: there was no obligation to rectify at the time.","es":""}},{"id":"B","text":{"fr":"","en":"Never, since the storage was lawful at the time.","es":""},"correct":false,"feedback":{"fr":"","en":"A new law can turn past damage into an obligating event.","es":""}},{"id":"C","text":{"fr":"","en":"In November 20X5, when the law requires the damage to be rectified.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"When the clean-up works are actually started and invoiced by the contractor chosen.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation exists as soon as the law is enacted, before the works.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000059","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000059","tested_point":"QST.IAS37.000059","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §17","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Isarne operates a quarry in a country where no law requires sites to be restored. In September 20X5, its chairman publicly announces, with figures and a timetable, that Isarne will restore the areas already worked; the local press and elected officials report it. What is the position at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"An obligating event leaves no realistic alternative to settling the obligation, in particular when it has created valid expectations in other parties (IAS 37, para. 17). A sufficiently specific public statement by which the entity accepts responsibility for rectifying existing damage creates a constructive obligation (IAS 37, para. 21): restoring the areas already worked is a present obligation.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No obligation, as no law requires restoration.","es":""},"correct":false,"feedback":{"fr":"","en":"A constructive obligation can exist without a law.","es":""}},{"id":"B","text":{"fr":"","en":"An obligation that will arise only when restoration works start.","es":""},"correct":false,"feedback":{"fr":"","en":"The specific announcement has already created valid expectations: the obligation exists at the reporting date.","es":""}},{"id":"C","text":{"fr":"","en":"An obligation that also covers the areas to be worked in the coming years.","es":""},"correct":false,"feedback":{"fr":"","en":"Only damage already caused gives rise to a present obligation; future areas depend on future actions.","es":""}},{"id":"D","text":{"fr":"","en":"A constructive obligation to restore the areas already worked.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000060","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000060","tested_point":"QST.IAS37.000060","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"A bill under discussion would require manufacturers to collect their old appliances; its detailed content has not yet been finalised. From when does a legal obligation arise for Junivel?","es":""},"explanation":{"fr":"","en":"Where the details of a proposed law have yet to be finalised, an obligation arises only when the law is virtually certain to be enacted as drafted; it is then treated as a legal obligation (IAS 37, para. 22).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As soon as the bill is tabled.","es":""},"correct":false,"feedback":{"fr":"","en":"A bill whose content has not been finalised does not yet create an obligation.","es":""}},{"id":"B","text":{"fr":"","en":"As soon as the press reports the bill.","es":""},"correct":false,"feedback":{"fr":"","en":"Media coverage does not make enactment virtually certain.","es":""}},{"id":"C","text":{"fr":"","en":"When the law is virtually certain to be enacted as drafted.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Only when Junivel receives an individual collection order from the authorities.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation can arise from the law itself, before any individual order.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000061","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000061","tested_point":"QST.IAS37.000061","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Korrane recognised a provision of 380,000 for a recycling levy provided for in a bill still being debated in Parliament; several amendments changing the tax base are under discussion and the vote is uncertain. What is the error?","es":""},"explanation":{"fr":"","en":"An obligation based on a proposed law arises only when the law is virtually certain to be enacted as drafted (IAS 37, para. 22). Here, neither the content nor the vote is settled: there is no present obligation and the provision should not have been recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No obligation exists: enactment of the law as drafted is not virtually certain.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The amount should have reflected the least favourable amendments.","es":""},"correct":false,"feedback":{"fr":"","en":"Taking the worst-case scenario does not cure the absence of an obligation.","es":""}},{"id":"C","text":{"fr":"","en":"The provision should have been presented as a tax payable.","es":""},"correct":false,"feedback":{"fr":"","en":"Classification is not at issue as long as the liability does not exist.","es":""}},{"id":"D","text":{"fr":"","en":"The provision should have been limited to half the amount, as the law may ultimately not be passed by Parliament.","es":""},"correct":false,"feedback":{"fr":"","en":"Weighting by a probability of passage does not create the missing obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000062","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000062","tested_point":"QST.IAS37.000062","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §17"],"exercise":{"prompt":{"fr":"","en":"For a past event to be an obligating event, which condition must it meet?","es":""},"explanation":{"fr":"","en":"An obligating event leaves the entity no realistic alternative to settling the obligation, either because settlement can be enforced by law or, for a constructive obligation, because the event has created valid expectations in other parties (IAS 37, para. 17).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It must have been approved by the shareholders' meeting.","es":""},"correct":false,"feedback":{"fr":"","en":"No shareholders' approval is required.","es":""}},{"id":"B","text":{"fr":"","en":"It must already have led to a cash payment.","es":""},"correct":false,"feedback":{"fr":"","en":"If a payment had already been made, the obligation would be at least partly settled.","es":""}},{"id":"C","text":{"fr":"","en":"It must relate to an amount known precisely.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty about the amount is compatible with a provision.","es":""}},{"id":"D","text":{"fr":"","en":"It must leave the entity no realistic alternative to settling the obligation.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000065","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000065","tested_point":"QST.IAS37.000065","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §18","IAS 37 §19"],"exercise":{"prompt":{"fr":"","en":"Nordak operates cold-storage warehouses. A regulation requires the refrigeration units using a now-banned fluid to be replaced by the end of 20X7, failing which the warehouses can no longer be operated; the replacement is estimated at 900,000. Nordak could also sell or close the warehouses before that date. At 31 December 20X5, what should be concluded?","es":""},"explanation":{"fr":"","en":"Only liabilities that exist at the reporting date are recognised, not costs to be incurred to operate in the future (IAS 37, para. 18). The replacement is required in order to keep operating the warehouses: Nordak can avoid it by its future actions (sale, closure), so no present obligation exists independently of its future conduct (IAS 37, para. 19). No provision is recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision of 900,000, as the replacement is required by a regulation.","es":""},"correct":false,"feedback":{"fr":"","en":"The regulatory requirement is a condition for future operation; it does not create a present obligation.","es":""}},{"id":"B","text":{"fr":"","en":"No provision: the replacement depends on continuing operations and remains avoidable.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A provision spread over 20X6 and 20X7, at 450,000 a year.","es":""},"correct":false,"feedback":{"fr":"","en":"Spreading the cost through a provision would amount to providing for a future operating cost.","es":""}},{"id":"D","text":{"fr":"","en":"A contingent liability of 900,000 disclosed in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"This is neither a possible nor a present obligation: no disclosure is required on that basis.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000066","standard_id":"IAS37","concept_ids":["IAS37.RECOGNITION.PRESENT_OBLIGATION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000066","tested_point":"QST.IAS37.000066","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000004","section_id":"more-likely-than-not"},"references":["IAS 37 §16"],"exercise":{"prompt":{"fr":"","en":"On 20 January 20X6, before the financial statements are authorised, a court orders Obervane to compensate a former partner for a breach committed in 20X5. The accountant keeps at 31 December 20X5 the mere contingent liability identified in November, on the grounds that \"the judgment is after the reporting date\". Where is the error?","es":""},"explanation":{"fr":"","en":"The existence of a present obligation is assessed on all available evidence, including information provided by events after the reporting period (IAS 37, para. 16). The judgment confirms that the obligation, arising from the 20X5 breach, existed at the reporting date: a provision must be recognised at 31 December 20X5 if the other criteria are met.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The accountant should have waited for the appeal period to expire.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard requires all available evidence to be used, without requiring a final judgment.","es":""}},{"id":"B","text":{"fr":"","en":"The accountant should have removed all disclosure, as the dispute has been decided.","es":""},"correct":false,"feedback":{"fr":"","en":"The decided dispute confirms the obligation: it must be recognised, not left out.","es":""}},{"id":"C","text":{"fr":"","en":"The January judgment sheds light on the position at the reporting date and had to be taken into account: a provision is required.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The contingent liability should have been increased by the amount awarded.","es":""},"correct":false,"feedback":{"fr":"","en":"A contingent liability is not recognised: increasing its amount does not solve the issue.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000067","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000067","tested_point":"QST.IAS37.000067","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §27"],"exercise":{"prompt":{"fr":"","en":"A contingent liability is recognised in the statement of financial position when its amount is material to the entity.","es":""},"explanation":{"fr":"","en":"An entity does not recognise a contingent liability (IAS 37, para. 27), whatever its amount; where required, it provides information in the notes.","es":""},"common_error":{"fr":"","en":"Recognising a merely possible obligation as a provision.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000068","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000068","tested_point":"QST.IAS37.000068","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"Pradane faces a possible obligation; the outflow of resources is neither probable nor remote. Which treatment applies?","es":""},"explanation":{"fr":"","en":"A contingent liability is not recognised; it is disclosed in the notes, unless the possibility of an outflow of resources is remote (IAS 37, para. 28). Here, the outflow is not remote.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for half the amount at stake, given the uncertainty about the outcome.","es":""},"correct":false,"feedback":{"fr":"","en":"A merely possible obligation is not recognised, even partly.","es":""}},{"id":"B","text":{"fr":"","en":"Disclosure in the notes, without recognition.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Neither recognition nor disclosure, since the advisers do not consider an outflow probable.","es":""},"correct":false,"feedback":{"fr":"","en":"Only a remote outflow exempts from disclosure; that is not the case here.","es":""}},{"id":"D","text":{"fr":"","en":"A full provision, as the entity must always protect itself against the risk.","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not justify recognising a contingent liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000069","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000069","tested_point":"QST.IAS37.000069","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"When the possibility of an outflow of resources is remote, no disclosure is required for the contingent liability.","es":""},"explanation":{"fr":"","en":"A contingent liability is disclosed in the notes unless the possibility of an outflow of resources is remote (IAS 37, para. 28): in the latter case, no disclosure is required for it.","es":""},"common_error":{"fr":"","en":"Disclosing every risk, even remote ones, at the expense of clarity.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000070","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000070","tested_point":"QST.IAS37.000070","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §27","IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"Which statements about contingent liabilities are correct?","es":""},"explanation":{"fr":"","en":"An entity does not recognise a contingent liability (IAS 37, para. 27); it discloses it in the notes unless the possibility of an outflow is remote (IAS 37, para. 28). A contingent liability may be a present obligation whose outflow is not probable: it is not limited to possible obligations.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A contingent liability is recognised at a reduced amount to reflect the uncertainty.","es":""},"correct":false,"feedback":{"fr":"","en":"No recognition, even partial, is allowed.","es":""}},{"id":"B","text":{"fr":"","en":"A contingent liability is never recognised.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A contingent liability is disclosed only if it is probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable outflow would lead to a provision; a contingent liability is disclosed as soon as it is not remote.","es":""}},{"id":"D","text":{"fr":"","en":"A contingent liability whose outflow is not remote is disclosed in the notes.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"A contingent liability is always an obligation whose existence is merely possible.","es":""},"correct":false,"feedback":{"fr":"","en":"A present obligation with a non-probable outflow is also a contingent liability.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000071","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000003","tested_point":"VG.IAS37.000003","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §29"],"exercise":{"prompt":{"fr":"","en":"Pradane and two other manufacturers jointly polluted a river; they are jointly and severally liable for the clean-up, estimated at {total_obligation}. The two other manufacturers are solvent and Pradane expects to bear {expected_share}% of the cost, in line with their sharing agreement. Compute the amount Pradane recognises as a provision and the amount treated as a contingent liability.","es":""},"explanation":{"fr":"","en":"Where an entity is jointly and severally liable, it provides for the part of the obligation for which an outflow is probable and treats as a contingent liability the part expected to be met by the other parties (IAS 37, para. 29). Provision: 900,000 × 40% = 360,000; contingent liability: 900,000 − 360,000 = 540,000.","es":""},"common_error":{"fr":"","en":"Providing for the full amount because Pradane can be pursued for all of it.","es":""},"format":"CALCULATION","placeholders":[{"id":"total_obligation","value":"900000","unit":"EUR"},{"id":"expected_share","value":"40","unit":"PERCENT"}],"data":[{"label":{"fr":"","en":"Total clean-up cost","es":""},"value":"900000","unit":"EUR"},{"label":{"fr":"","en":"Share Pradane expects to bear (%)","es":""},"value":"40","unit":"PERCENT"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Provision recognised by Pradane","es":""},"answer":360000,"tolerance":0,"unit":"EUR"},{"id":"CONTINGENT_AMOUNT","label":{"fr":"","en":"Amount treated as a contingent liability","es":""},"answer":540000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Provision recognised by Pradane","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Total clean-up cost","es":""},"value":900000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Share Pradane expects to bear (%)","es":""},"value":40,"unit":"PERCENT"}],"result":360000,"unit":"EUR"},{"step":"CONTINGENT_AMOUNT","meaning":{"fr":"","en":"Amount treated as a contingent liability","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Total clean-up cost","es":""},"value":900000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provision recognised by Pradane","es":""},"value":360000,"unit":"EUR"}],"result":540000,"unit":"EUR"}],"rationale":{"fr":"","en":"Where an entity is jointly and severally liable, it provides for the part of the obligation for which an outflow is probable and treats as a contingent liability the part expected to be met by the other parties (IAS 37, para. 29).","es":""},"references":["REF.IAS37.29"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000072","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000003","tested_point":"VG.IAS37.000003","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §29","IAS 37 §58"],"exercise":{"prompt":{"fr":"","en":"A consortium formed by Sorvane and a partner has been ordered to pay {damages_awarded} to a project owner; both members are jointly and severally liable. The consortium agreement allocates {contractual_share}% of the charge to Sorvane. The partner, in financial difficulty, will probably be unable to pay a portion of its share equal to {partner_shortfall}% of the total amount, which Sorvane expects to have to pay. Compute Sorvane's provision and the amount it treats as a contingent liability.","es":""},"explanation":{"fr":"","en":"Sorvane provides for the part of the obligation for which an outflow is probable, including the portion that the defaulting partner will not pay, and treats as a contingent liability the part the partner is expected to meet (IAS 37, para. 29; IAS 37, para. 58). Probable share: 30% + 10% = 40%; provision: 2,600,000 × 40% = 1,040,000; contingent liability: 2,600,000 − 1,040,000 = 1,560,000. The estimate of the partner's default is case data that involves management's judgement.","es":""},"common_error":{"fr":"","en":"Sticking to the contractual share and ignoring the partner's expected default.","es":""},"format":"CALCULATION","placeholders":[{"id":"damages_awarded","value":"2600000","unit":"EUR"},{"id":"contractual_share","value":"30","unit":"PERCENT"},{"id":"partner_shortfall","value":"10","unit":"PERCENT"}],"data":[{"label":{"fr":"","en":"Amount awarded","es":""},"value":"2600000","unit":"EUR"},{"label":{"fr":"","en":"Sorvane's contractual share (%)","es":""},"value":"30","unit":"PERCENT"},{"label":{"fr":"","en":"Partner's expected unpaid portion (% of total)","es":""},"value":"10","unit":"PERCENT"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Sorvane's provision","es":""},"answer":1040000,"tolerance":0,"unit":"EUR"},{"id":"CONTINGENT_AMOUNT","label":{"fr":"","en":"Amount treated as a contingent liability","es":""},"answer":1560000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"CONTINGENT_AMOUNT","meaning":{"fr":"","en":"Amount treated as a contingent liability","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Amount awarded","es":""},"value":2600000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Sorvane's provision","es":""},"value":1040000,"unit":"EUR"}],"result":1560000,"unit":"EUR"}],"rationale":{"fr":"","en":"Sorvane provides for the part of the obligation for which an outflow is probable, including the portion that the defaulting partner will not pay, and treats as a contingent liability the part the partner is expected to meet (IAS 37, para. 29; IAS 37, para. 58).","es":""},"references":["REF.IAS37.29","REF.IAS37.58"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000073","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000073","tested_point":"QST.IAS37.000073","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §29","IAS 37 §58"],"exercise":{"prompt":{"fr":"","en":"In a joint and several obligation, how does the entity treat the part expected to be met by the other parties?","es":""},"explanation":{"fr":"","en":"The part of the obligation that is expected to be met by other parties is treated as a contingent liability; the entity provides for the part for which an outflow is probable (IAS 37, para. 29), and the standard repeats this treatment for joint and several obligations (IAS 37, para. 58).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It provides for it in full, as it can be pursued for the entire common debt.","es":""},"correct":false,"feedback":{"fr":"","en":"The part expected from the other parties does not lead to a probable outflow for the entity.","es":""}},{"id":"B","text":{"fr":"","en":"It ignores it entirely, since it will not pay it.","es":""},"correct":false,"feedback":{"fr":"","en":"This part remains a contingent liability: it is not ignored; it is disclosed unless remote.","es":""}},{"id":"C","text":{"fr":"","en":"It treats it as a contingent liability.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"It recognises it as a payable to the other parties.","es":""},"correct":false,"feedback":{"fr":"","en":"The entity owes nothing to the other parties: there is no payable to them.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000074","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000074","tested_point":"QST.IAS37.000074","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"An item treated as a contingent liability at one reporting date keeps that treatment until it is settled, even if an outflow of resources later becomes probable.","es":""},"explanation":{"fr":"","en":"Contingent liabilities are assessed continually; if an outflow becomes probable for an item previously dealt with as a contingent liability, a provision is recognised in the period in which the change in probability occurs, unless no reliable estimate can be made (IAS 37, para. 30).","es":""},"common_error":{"fr":"","en":"Keeping an old contingent liability classification out of inertia.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000075","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000075","tested_point":"QST.IAS37.000075","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"At the end of 20X4, Tesmara disclosed a customer claim as a contingent liability, the outflow then being merely possible. In October 20X5, new evidence makes an adverse ruling probable and the compensation estimable. What is the treatment at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"Contingent liabilities are assessed continually: as the outflow becomes probable in 20X5, a provision is recognised in the 20X5 financial statements, the period in which the change in probability occurs (IAS 37, para. 30). The 20X4 financial statements are not restated.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Keep the mere contingent liability disclosure until the judgment.","es":""},"correct":false,"feedback":{"fr":"","en":"As the outflow has become probable, a provision is required.","es":""}},{"id":"B","text":{"fr":"","en":"Recognise a provision in 20X5, the period of the change in probability.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Restate 20X4 to recognise the provision there.","es":""},"correct":false,"feedback":{"fr":"","en":"The 20X4 classification reflected the information available then: it is not restated.","es":""}},{"id":"D","text":{"fr":"","en":"Recognise the provision directly in opening equity, as a correction of an error.","es":""},"correct":false,"feedback":{"fr":"","en":"The provision follows the normal treatment in profit or loss of the period; nothing justifies equity.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000076","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000076","tested_point":"QST.IAS37.000076","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"At 31 December 20X5, Urvane discloses as a contingent liability a dispute with a carrier whose outcome is possible. In March 20X6, after the 20X5 financial statements were authorised, new testimony about facts that occurred in February 20X6 makes an adverse ruling probable; the compensation can be estimated. How is this change reflected?","es":""},"explanation":{"fr":"","en":"The contingent liability is assessed continually; the provision is recognised in the financial statements of the period in which the outflow becomes probable (IAS 37, para. 30), i.e. 20X6. The 20X5 financial statements, already authorised on the basis of the information then available, are not changed.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The 20X5 financial statements must be reopened to recognise the provision.","es":""},"correct":false,"feedback":{"fr":"","en":"Authorised financial statements are not reopened for a change in probability that occurred in 20X6.","es":""}},{"id":"B","text":{"fr":"","en":"No provision before the final judgment.","es":""},"correct":false,"feedback":{"fr":"","en":"An outflow that has become probable and estimable requires a provision without waiting for the judgment.","es":""}},{"id":"C","text":{"fr":"","en":"A provision is recognised in 20X6, then spread retrospectively between 20X5 and 20X6.","es":""},"correct":false,"feedback":{"fr":"","en":"No retrospective spreading is provided for: the provision is recognised in the period of the change.","es":""}},{"id":"D","text":{"fr":"","en":"A provision is recognised in the 20X6 financial statements.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000077","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000077","tested_point":"QST.IAS37.000077","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §27","IAS 37 §28"],"exercise":{"prompt":{"fr":"","en":"Vilmontane has a present obligation towards a former subcontractor, but its advisers consider a payment merely possible: the outflow is neither probable nor remote. Which treatment applies?","es":""},"explanation":{"fr":"","en":"A present obligation whose outflow is not probable does not meet the recognition criteria: it is a contingent liability, not recognised (IAS 37, para. 27), and disclosed in the notes since the outflow is not remote (IAS 37, para. 28).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision, since a present obligation already exists at the reporting date.","es":""},"correct":false,"feedback":{"fr":"","en":"A present obligation is not enough: the outflow must also be probable.","es":""}},{"id":"B","text":{"fr":"","en":"A provision reduced to the estimated probability of payment.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard does not provide for a provision proportional to probability for a single obligation.","es":""}},{"id":"C","text":{"fr":"","en":"A contingent liability disclosed in the notes.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"No treatment, since the outflow is not probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A possible, not remote, outflow requires disclosure in the notes.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000078","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"CALCULATION","context":"V1_QST.IAS37.000078","tested_point":"QST.IAS37.000078","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §29"],"exercise":{"prompt":{"fr":"","en":"Wendrel owns, in equal shares with two other solvent companies, a pipeline whose leak polluted neighbouring land. The {co_owners} co-owners are jointly and severally liable for the clean-up, costed at {clean_up_cost}; each expects to bear an equal share. What amount does Wendrel disclose as a contingent liability?","es":""},"explanation":{"fr":"","en":"Wendrel provides for the part for which an outflow is probable, i.e. 1,260,000 / 3 = 420,000; the part expected to be met by the other co-owners is treated as a contingent liability (IAS 37, para. 29): 1,260,000 − 420,000 = 840,000.","es":""},"common_error":{"fr":"","en":"Disclosing the total cost, provision included, as a contingent liability.","es":""},"format":"CALCULATION","placeholders":[{"id":"clean_up_cost","value":"1260000","unit":"EUR"},{"id":"co_owners","value":"3","unit":"UNITS"}],"data":[{"label":{"fr":"","en":"Total clean-up cost","es":""},"value":"1260000","unit":"EUR"},{"label":{"fr":"","en":"Number of co-owners","es":""},"value":"3","unit":"UNITS"}],"steps":[{"id":"CONTINGENT_AMOUNT","label":{"fr":"","en":"Amount disclosed as a contingent liability","es":""},"answer":840000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"CONTINGENT_AMOUNT","meaning":{"fr":"","en":"Amount disclosed as a contingent liability","es":""},"expression":"a - (a / b)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Total clean-up cost","es":""},"value":1260000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Number of co-owners","es":""},"value":3,"unit":"UNITS"}],"result":840000,"unit":"EUR","rationale":{"fr":"","en":"the part expected to be met by the other co-owners is treated as a contingent liability (IAS 37, para. 29): 1,260,000 − 420,000 = 840,000.","es":""}}],"references":["REF.IAS37.29"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000079","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000079","tested_point":"QST.IAS37.000079","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §27","IAS 37 §28","IAS 37 §30"],"exercise":{"prompt":{"fr":"","en":"At 31 December 20X5, Yselle reviews three files: (1) a possible obligation whose outflow is considered remote; (2) a possible obligation whose outflow is possible; (3) a file disclosed as a contingent liability in 20X4, whose outflow became probable and estimable in 20X5. Which overall treatment is correct?","es":""},"explanation":{"fr":"","en":"No contingent liability is recognised (IAS 37, para. 27); it is disclosed unless the outflow is remote (IAS 37, para. 28): file 1 requires no disclosure, file 2 is disclosed. File 3, reassessed, becomes a provision in the period in which the outflow became probable (IAS 37, para. 30).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"(1) disclosure; (2) disclosure; (3) disclosure maintained.","es":""},"correct":false,"feedback":{"fr":"","en":"A remote outflow is not disclosed, and file 3 must become a provision.","es":""}},{"id":"B","text":{"fr":"","en":"(1) nothing; (2) disclosure as a contingent liability; (3) provision in 20X5.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"(1) nothing; (2) nothing; (3) provision in 20X5.","es":""},"correct":false,"feedback":{"fr":"","en":"File 2, whose outflow is possible, must be disclosed.","es":""}},{"id":"D","text":{"fr":"","en":"(1) disclosure; (2) provision; (3) provision in 20X4 by restatement.","es":""},"correct":false,"feedback":{"fr":"","en":"A possible obligation is not provided for, and file 3 is not restated in 20X4.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000080","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.LIABILITIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000080","tested_point":"QST.IAS37.000080","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-liability-rule"},"references":["IAS 37 §29"],"exercise":{"prompt":{"fr":"","en":"An entity that is jointly and severally liable for an obligation always provides for the full amount, since the creditor can claim all of it from the entity.","es":""},"explanation":{"fr":"","en":"Where an entity is jointly and severally liable, it provides only for the part for which an outflow is probable; the part expected to be met by the other parties is a contingent liability (IAS 37, para. 29).","es":""},"common_error":{"fr":"","en":"Providing for the whole of a common debt on the grounds of joint and several liability.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000081","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000081","tested_point":"QST.IAS37.000081","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §31"],"exercise":{"prompt":{"fr":"","en":"An entity does not recognise a contingent asset.","es":""},"explanation":{"fr":"","en":"The standard prohibits recognising contingent assets (IAS 37, para. 31); information is disclosed when an inflow of economic benefits is probable.","es":""},"common_error":{"fr":"","en":"Recognising compensation that is merely hoped for.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000082","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000082","tested_point":"QST.IAS37.000082","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Zéphane has sued a supplier; its lawyers consider it probable, but not virtually certain, that compensation will be obtained. Which treatment applies?","es":""},"explanation":{"fr":"","en":"A contingent asset is not recognised; it is disclosed when an inflow of economic benefits is probable (IAS 37, para. 34), which is the case here.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The corresponding receivable and income, since the inflow is probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A merely probable inflow does not permit recognition: virtual certainty is required.","es":""}},{"id":"B","text":{"fr":"","en":"No disclosure, since the asset is not recognised.","es":""},"correct":false,"feedback":{"fr":"","en":"Non-recognition does not prevent disclosure when the inflow is probable.","es":""}},{"id":"C","text":{"fr":"","en":"A reduction in expenses for the period equal to the expected compensation.","es":""},"correct":false,"feedback":{"fr":"","en":"Reducing expenses would recognise the contingent asset by another route.","es":""}},{"id":"D","text":{"fr":"","en":"Disclosure of this contingent asset in the notes.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000083","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000083","tested_point":"QST.IAS37.000083","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §33"],"exercise":{"prompt":{"fr":"","en":"By symmetry with provisions, a contingent asset is recognised as soon as an inflow of economic benefits is probable.","es":""},"explanation":{"fr":"","en":"Contingent assets are not recognised because this could result in recognising income that may never be realised; only when the realisation of income is virtually certain is the asset no longer contingent and recognised (IAS 37, para. 33). The threshold is therefore stricter than for liabilities.","es":""},"common_error":{"fr":"","en":"Applying the \"probable\" threshold of provisions to assets.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000084","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000084","tested_point":"QST.IAS37.000084","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"From what degree of probability does an inflow of economic benefits related to a contingent asset lead to recognising an asset?","es":""},"explanation":{"fr":"","en":"When the realisation of income is virtually certain, the asset is no longer contingent and its recognition is appropriate (IAS 37, para. 33). A merely probable inflow leads to disclosure in the notes (IAS 37, para. 34).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As soon as the inflow is probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable inflow gives rise to disclosure, not recognition.","es":""}},{"id":"B","text":{"fr":"","en":"When the inflow is virtually certain.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"As soon as the inflow is no longer remote.","es":""},"correct":false,"feedback":{"fr":"","en":"An inflow that is not remote may be merely possible: no accounting treatment.","es":""}},{"id":"D","text":{"fr":"","en":"As soon as the inflow is possible and its amount is known precisely.","es":""},"correct":false,"feedback":{"fr":"","en":"Knowing the amount does not replace virtual certainty of the inflow.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000085","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000085","tested_point":"QST.IAS37.000085","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §31","IAS 37 §32","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Lorcane is training its accountants on the treatment of claims it brings against third parties. Which of these propositions should be retained?","es":""},"explanation":{"fr":"","en":"Contingent assets usually arise from unplanned or unexpected events that give rise to the possibility of an inflow, such as a claim pursued through legal proceedings with an uncertain outcome (IAS 37, para. 32). They are not recognised (IAS 37, para. 31) and are disclosed when the inflow is probable (IAS 37, para. 34).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A contingent asset is recognised as income as soon as its inflow is probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable inflow leads to disclosure, never to income.","es":""}},{"id":"B","text":{"fr":"","en":"A legal claim brought by the entity, with an uncertain outcome, may be a contingent asset.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A contingent asset is not recognised.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A contingent asset is disclosed in the notes as soon as its inflow is merely possible.","es":""},"correct":false,"feedback":{"fr":"","en":"A merely possible inflow gives rise to no disclosure.","es":""}},{"id":"E","text":{"fr":"","en":"A contingent asset whose inflow is probable is disclosed in the notes.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000088","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000088","tested_point":"QST.IAS37.000088","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §34","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Fiorane has filed a claim against a former distributor for breach of an exclusivity clause. At the reporting date, its lawyers consider it probable that it will obtain compensation, but the hearing has not taken place and the amount is still disputed. What does Fiorane do?","es":""},"explanation":{"fr":"","en":"The inflow is probable but not virtually certain: the asset remains contingent and is not recognised; it is disclosed in the notes (IAS 37, para. 34). It will be recognised in the period in which the inflow becomes virtually certain (IAS 37, para. 35).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It recognises a receivable for the most likely amount of the compensation.","es":""},"correct":false,"feedback":{"fr":"","en":"Recognition requires a virtually certain inflow.","es":""}},{"id":"B","text":{"fr":"","en":"It recognises nothing and discloses the contingent asset in the notes.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"It does nothing until the hearing has taken place.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable inflow requires disclosure, even before the hearing.","es":""}},{"id":"D","text":{"fr":"","en":"It recognises half the compensation claimed.","es":""},"correct":false,"feedback":{"fr":"","en":"No partial recognition of a contingent asset is allowed.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000089","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000089","tested_point":"QST.IAS37.000089","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §33","IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 5 December 20X5, a court of first instance orders a supplier to pay 310,000 to Gorvald. The supplier appealed on 20 December and Gorvald's lawyers consider the outcome of the appeal favourable but not assured. What does Gorvald recognise at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"As long as the realisation of income is not virtually certain, the asset remains contingent and is not recognised (IAS 37, para. 33). The appeal leaves a genuine uncertainty: Gorvald discloses the contingent asset if the inflow is probable and will recognise it in the period in which the inflow becomes virtually certain (IAS 37, para. 35).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A receivable of 310,000, since a judgment has been handed down.","es":""},"correct":false,"feedback":{"fr":"","en":"A judgment under appeal does not make the inflow virtually certain.","es":""}},{"id":"B","text":{"fr":"","en":"A receivable of 310,000 written down by half to reflect the appeal.","es":""},"correct":false,"feedback":{"fr":"","en":"Partial recognition is not provided for a contingent asset.","es":""}},{"id":"C","text":{"fr":"","en":"No receivable: the inflow is not virtually certain while the appeal is pending.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Income of 310,000 offset by a provision of the same amount.","es":""},"correct":false,"feedback":{"fr":"","en":"This arrangement would indirectly recognise a contingent asset.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000090","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000090","tested_point":"QST.IAS37.000090","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §33"],"exercise":{"prompt":{"fr":"","en":"Why does IAS 37 prohibit recognising a contingent asset?","es":""},"explanation":{"fr":"","en":"Contingent assets are not recognised because this could result in recognising income that may never be realised (IAS 37, para. 33).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Because their amount can never be measured.","es":""},"correct":false,"feedback":{"fr":"","en":"The amount can sometimes be estimated; this is not the reason given.","es":""}},{"id":"B","text":{"fr":"","en":"Because this could result in recognising income that may never be realised.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Because an asset can only arise from a signed contract.","es":""},"correct":false,"feedback":{"fr":"","en":"An asset can arise from other events; this is not the reason given by the standard.","es":""}},{"id":"D","text":{"fr":"","en":"Because they are always offset by contingent liabilities.","es":""},"correct":false,"feedback":{"fr":"","en":"No such offsetting is provided for.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000091","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000091","tested_point":"QST.IAS37.000091","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"When an inflow of economic benefits becomes virtually certain, the asset and the related income are recognised in the financial statements of the period in which the change occurs.","es":""},"explanation":{"fr":"","en":"Contingent assets are assessed continually; if an inflow becomes virtually certain, the asset and the related income are recognised in the period of the change (IAS 37, para. 35).","es":""},"common_error":{"fr":"","en":"Restating prior periods when the inflow becomes virtually certain.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000092","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS","IAS37.RECOGNITION.CRITERIA"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000092","tested_point":"QST.IAS37.000092","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000003","section_id":"three-conditions"},"references":["IAS 37 §14","IAS 37 §33","IAS 37 §34"],"exercise":{"prompt":{"fr":"","en":"Irdane is both the defendant in a dispute with a customer (adverse ruling probable, amount estimable) and the claimant in a dispute against a subcontractor (gain probable, amount estimable). Neither outcome is virtually certain. What is the overall treatment?","es":""},"explanation":{"fr":"","en":"For the dispute brought against it, the three conditions are met: Irdane recognises a provision (IAS 37, para. 14). For the dispute it has brought, the inflow is only probable: the asset remains contingent, not recognised (IAS 37, para. 33), and is disclosed in the notes (IAS 37, para. 34). The thresholds are asymmetric.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision and a receivable, by symmetry.","es":""},"correct":false,"feedback":{"fr":"","en":"There is no symmetry: the asset requires virtual certainty.","es":""}},{"id":"B","text":{"fr":"","en":"No recognition for either, for lack of virtual certainty.","es":""},"correct":false,"feedback":{"fr":"","en":"Virtual certainty is required only for the asset; the provision follows the \"probable\" threshold.","es":""}},{"id":"C","text":{"fr":"","en":"The provision and the receivable are offset and only the net balance is recognised.","es":""},"correct":false,"feedback":{"fr":"","en":"A contingent asset cannot be used to offset a provision.","es":""}},{"id":"D","text":{"fr":"","en":"A provision for the dispute brought against it; mere note disclosure for the dispute it has brought.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000093","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000093","tested_point":"QST.IAS37.000093","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §32"],"exercise":{"prompt":{"fr":"","en":"Which of these situations at Jasmor best illustrates a contingent asset?","es":""},"explanation":{"fr":"","en":"Contingent assets usually arise from unplanned or unexpected events that give rise to the possibility of an inflow of economic benefits, for example a claim that the entity is pursuing through legal processes with an uncertain outcome (IAS 37, para. 32).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A trade receivable from a sale delivered and invoiced.","es":""},"correct":false,"feedback":{"fr":"","en":"A receivable from a delivered sale is not contingent: it is recognised.","es":""}},{"id":"B","text":{"fr":"","en":"Finished goods held for sale.","es":""},"correct":false,"feedback":{"fr":"","en":"Inventory is a recognised asset; nothing contingent.","es":""}},{"id":"C","text":{"fr":"","en":"A lawsuit brought by Jasmor against a supplier, whose outcome is uncertain.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A grant received and collected during the period.","es":""},"correct":false,"feedback":{"fr":"","en":"A grant already collected is no longer uncertain.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000094","standard_id":"IAS37","concept_ids":["IAS37.CONTINGENCIES.ASSETS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000094","tested_point":"QST.IAS37.000094","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000005","section_id":"contingent-asset-rule"},"references":["IAS 37 §33"],"exercise":{"prompt":{"fr":"","en":"When the realisation of income has become virtually certain, the related asset remains a contingent asset, merely disclosed in the notes.","es":""},"explanation":{"fr":"","en":"When the realisation of income is virtually certain, the related asset is not a contingent asset and its recognition is appropriate (IAS 37, para. 33).","es":""},"common_error":{"fr":"","en":"Continuing to merely disclose an asset that has become virtually certain.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000095","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000095","tested_point":"QST.IAS37.000095","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date.","es":""},"explanation":{"fr":"","en":"A provision is measured at the best estimate of the expenditure required to settle the present obligation at the reporting date (IAS 37, para. 36).","es":""},"common_error":{"fr":"","en":"Measuring the provision at the amount claimed by the third party.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000096","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000096","tested_point":"QST.IAS37.000096","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"How does IAS 37 describe the best estimate of the expenditure required to settle an obligation?","es":""},"explanation":{"fr":"","en":"The best estimate is the amount that the entity would rationally pay to settle the obligation at the reporting date or to transfer it to a third party at that time, even if such settlement or transfer is in practice impossible or prohibitively expensive (IAS 37, para. 37).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The maximum amount the entity could have to pay in the worst-case scenario.","es":""},"correct":false,"feedback":{"fr":"","en":"The worst case is not the best estimate and would lead to an excessive provision.","es":""}},{"id":"B","text":{"fr":"","en":"The amount claimed by the third party in its initial demand.","es":""},"correct":false,"feedback":{"fr":"","en":"The third party's claim is a piece of data, not the measure of the obligation.","es":""}},{"id":"C","text":{"fr":"","en":"The lowest amount in the range of possible outcomes.","es":""},"correct":false,"feedback":{"fr":"","en":"Taking the minimum would understate the obligation.","es":""}},{"id":"D","text":{"fr":"","en":"The amount the entity would rationally pay to settle or transfer the obligation at the reporting date.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000097","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000097","tested_point":"QST.IAS37.000097","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Kalvane measures its litigation provision net of the tax saving that payment of the compensation will provide.","es":""},"explanation":{"fr":"","en":"A provision is measured before tax; its tax consequences, and changes in them, are dealt with under IAS 12 (IAS 37, para. 41).","es":""},"common_error":{"fr":"","en":"Deducting the expected tax saving from the provision.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000098","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000005","tested_point":"VG.IAS37.000005","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"Kalvane sold {units_sold} dishwashers with a two-year warranty in 20X5. Based on its history, {minor_rate}% of the appliances will need a minor repair ({minor_cost} each), {major_rate}% a major repair ({major_cost} each) and {replacement_rate}% a replacement ({replacement_cost} each); the others will have no defect. Compute the warranty provision at 31 December 20X5 (the effect of discounting is not material).","es":""},"explanation":{"fr":"","en":"For a large population of items, the obligation is estimated by weighting all possible outcomes by their probabilities: this is the expected value (IAS 37, para. 39). Expected cost per appliance: 6% × 40 + 1.5% × 220 + 0.5% × 500 = 2.4 + 3.3 + 2.5 = 8.2; provision: 12,000 × 8.2 = 98,400. The use of the expected value follows here from the rule for a large population; the rates are case data.","es":""},"common_error":{"fr":"","en":"Taking the most likely outcome (no defect) and providing nothing.","es":""},"format":"CALCULATION","placeholders":[{"id":"units_sold","value":"12000","unit":"UNITS"},{"id":"minor_rate","value":"6","unit":"PERCENT"},{"id":"minor_cost","value":"40","unit":"EUR"},{"id":"major_rate","value":"1.5","unit":"PERCENT"},{"id":"major_cost","value":"220","unit":"EUR"},{"id":"replacement_rate","value":"0.5","unit":"PERCENT"},{"id":"replacement_cost","value":"500","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Appliances sold under warranty","es":""},"value":"12000","unit":"UNITS"},{"label":{"fr":"","en":"Proportion of minor repairs (%)","es":""},"value":"6","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of a minor repair","es":""},"value":"40","unit":"EUR"},{"label":{"fr":"","en":"Proportion of major repairs (%)","es":""},"value":"1.5","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of a major repair","es":""},"value":"220","unit":"EUR"},{"label":{"fr":"","en":"Proportion of replacements (%)","es":""},"value":"0.5","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of a replacement","es":""},"value":"500","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Warranty provision","es":""},"answer":98400,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Warranty provision","es":""},"expression":"a * (b * c + d * e + f * g)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Appliances sold under warranty","es":""},"value":12000,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Proportion of minor repairs (%)","es":""},"value":6,"unit":"PERCENT"},{"symbol":"c","meaning":{"fr":"","en":"Cost of a minor repair","es":""},"value":40,"unit":"EUR"},{"symbol":"d","meaning":{"fr":"","en":"Proportion of major repairs (%)","es":""},"value":1.5,"unit":"PERCENT"},{"symbol":"e","meaning":{"fr":"","en":"Cost of a major repair","es":""},"value":220,"unit":"EUR"},{"symbol":"f","meaning":{"fr":"","en":"Proportion of replacements (%)","es":""},"value":0.5,"unit":"PERCENT"},{"symbol":"g","meaning":{"fr":"","en":"Cost of a replacement","es":""},"value":500,"unit":"EUR"}],"result":98400,"unit":"EUR"}],"rationale":{"fr":"","en":"For a large population of items, the obligation is estimated by weighting all possible outcomes by their probabilities: this is the expected value (IAS 37, para. 39).","es":""},"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000099","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000005","tested_point":"VG.IAS37.000005","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"The electric bicycle maker Lorcane covers for one year the {bikes_sold} bicycles delivered in 20X5. Its workshop statistics forecast: an adjustment on {adjust_rate}% of the bicycles ({adjust_cost} per job), a motor replacement on {motor_rate}% ({motor_cost}), a frame change on {frame_rate}% ({frame_cost}). What provision does Lorcane recognise at the reporting date, discounting having no material effect?","es":""},"explanation":{"fr":"","en":"The bicycles form a large population of similar obligations: the provision is the expected value, the sum of the possible costs weighted by their probability (IAS 37, para. 39). Per bicycle: 8% × 65 + 2% × 310 + 0.4% × 900 = 5.2 + 6.2 + 3.6 = 15; total: 3,500 × 15 = 52,500.","es":""},"common_error":{"fr":"","en":"Adding the three unit costs without weighting them.","es":""},"format":"CALCULATION","placeholders":[{"id":"bikes_sold","value":"3500","unit":"UNITS"},{"id":"adjust_rate","value":"8","unit":"PERCENT"},{"id":"adjust_cost","value":"65","unit":"EUR"},{"id":"motor_rate","value":"2","unit":"PERCENT"},{"id":"motor_cost","value":"310","unit":"EUR"},{"id":"frame_rate","value":"0.4","unit":"PERCENT"},{"id":"frame_cost","value":"900","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Bicycles covered by the warranty","es":""},"value":"3500","unit":"UNITS"},{"label":{"fr":"","en":"Adjustment rate (%)","es":""},"value":"8","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of an adjustment","es":""},"value":"65","unit":"EUR"},{"label":{"fr":"","en":"Motor replacement rate (%)","es":""},"value":"2","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of a motor","es":""},"value":"310","unit":"EUR"},{"label":{"fr":"","en":"Frame change rate (%)","es":""},"value":"0.4","unit":"PERCENT"},{"label":{"fr":"","en":"Cost of a frame","es":""},"value":"900","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Warranty provision","es":""},"answer":52500,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Warranty provision","es":""},"expression":"a * (b * c + d * e + f * g)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Bicycles covered by the warranty","es":""},"value":3500,"unit":"UNITS"},{"symbol":"b","meaning":{"fr":"","en":"Adjustment rate (%)","es":""},"value":8,"unit":"PERCENT"},{"symbol":"c","meaning":{"fr":"","en":"Cost of an adjustment","es":""},"value":65,"unit":"EUR"},{"symbol":"d","meaning":{"fr":"","en":"Motor replacement rate (%)","es":""},"value":2,"unit":"PERCENT"},{"symbol":"e","meaning":{"fr":"","en":"Cost of a motor","es":""},"value":310,"unit":"EUR"},{"symbol":"f","meaning":{"fr":"","en":"Frame change rate (%)","es":""},"value":0.4,"unit":"PERCENT"},{"symbol":"g","meaning":{"fr":"","en":"Cost of a frame","es":""},"value":900,"unit":"EUR"}],"result":52500,"unit":"EUR"}],"rationale":{"fr":"","en":"The bicycles form a large population of similar obligations: the provision is the expected value, the sum of the possible costs weighted by their probability (IAS 37, para. 39).","es":""},"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000100","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000006","tested_point":"VG.IAS37.000006","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"Marvaline must compensate a customer for the delivery of non-compliant parts. Its experts estimate that the compensation will fall within a continuous range from {low_end} to {high_end}, every amount in the range being equally likely. Compute the provision.","es":""},"explanation":{"fr":"","en":"Where there is a continuous range of possible outcomes and each point in that range is as likely as any other, the mid-point of the range is used (IAS 37, para. 39): (180,000 + 260,000) / 2 = 220,000.","es":""},"common_error":{"fr":"","en":"Taking the high end out of prudence.","es":""},"format":"CALCULATION","placeholders":[{"id":"low_end","value":"180000","unit":"EUR"},{"id":"high_end","value":"260000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Low end of the range","es":""},"value":"180000","unit":"EUR"},{"label":{"fr":"","en":"High end of the range","es":""},"value":"260000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Provision","es":""},"answer":220000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Provision","es":""},"expression":"(a + b) / 2","variables":[{"symbol":"a","meaning":{"fr":"","en":"Low end of the range","es":""},"value":180000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"High end of the range","es":""},"value":260000,"unit":"EUR"}],"result":220000,"unit":"EUR","rationale":{"fr":"","en":"Where there is a continuous range of possible outcomes and each point in that range is as likely as any other, the mid-point of the range is used (IAS 37, para. 39): (180,000 + 260,000) / 2 = 220,000.","es":""}}],"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000101","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000006","tested_point":"VG.IAS37.000006","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"A fire in a warehouse leased by Nestane damaged the premises of a neighbour, towards which Nestane is liable. The estimate of the repair works varies continuously between {minimum_cost} and {maximum_cost}, with no amount more likely than another. What amount should be provided for?","es":""},"explanation":{"fr":"","en":"For a continuous range of equally likely outcomes, the best estimate is the mid-point of the range (IAS 37, para. 39): (1,150,000 + 1,410,000) / 2 = 1,280,000.","es":""},"common_error":{"fr":"","en":"Taking the average of quotes that do not represent the range.","es":""},"format":"CALCULATION","placeholders":[{"id":"minimum_cost","value":"1150000","unit":"EUR"},{"id":"maximum_cost","value":"1410000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Minimum estimate","es":""},"value":"1150000","unit":"EUR"},{"label":{"fr":"","en":"Maximum estimate","es":""},"value":"1410000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Provision","es":""},"answer":1280000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Provision","es":""},"expression":"(a + b) / 2","variables":[{"symbol":"a","meaning":{"fr":"","en":"Minimum estimate","es":""},"value":1150000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Maximum estimate","es":""},"value":1410000,"unit":"EUR"}],"result":1280000,"unit":"EUR","rationale":{"fr":"","en":"For a continuous range of equally likely outcomes, the best estimate is the mid-point of the range (IAS 37, para. 39): (1,150,000 + 1,410,000) / 2 = 1,280,000.","es":""}}],"references":["REF.IAS37.39"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000102","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000102","tested_point":"QST.IAS37.000102","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Opaliane must remedy a roof leak in a warehouse it delivered to a customer. A first intervention would cost 140,000 and is the most likely individual outcome; however, the experts consider the risk high that one or two further interventions, of 90,000 each, will be needed. How should the provision be set?","es":""},"explanation":{"fr":"","en":"For a single obligation, the individual most likely outcome may be the best estimate, but the entity considers the other possible outcomes: where they are mostly higher, the best estimate is a higher amount (IAS 37, para. 40). The provision therefore exceeds 140,000; its precise amount is a matter of judgement, based on the probabilities of the further interventions.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"At 140,000, the most likely outcome, with no other adjustment.","es":""},"correct":false,"feedback":{"fr":"","en":"Ignoring the risk of further interventions understates the obligation.","es":""}},{"id":"B","text":{"fr":"","en":"At an amount above 140,000, the other possible outcomes being mostly higher.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"At 320,000, the cost of the worst-case scenario, out of prudence.","es":""},"correct":false,"feedback":{"fr":"","en":"The worst-case scenario is not the best estimate.","es":""}},{"id":"D","text":{"fr":"","en":"At 90,000, the cost of one further intervention.","es":""},"correct":false,"feedback":{"fr":"","en":"This amount does not correspond to any relevant outcome of the obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000103","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000103","tested_point":"QST.IAS37.000103","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"For a single obligation, Pyrane estimates the most likely outcome at 500,000, but most of the other possible outcomes are lower. What is the effect on the best estimate?","es":""},"explanation":{"fr":"","en":"The most likely outcome is a starting point; where the other possible outcomes are mostly lower, the best estimate is a lower amount (IAS 37, para. 40).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"None: only the most likely outcome matters for a single obligation.","es":""},"correct":false,"feedback":{"fr":"","en":"The other possible outcomes must be considered.","es":""}},{"id":"B","text":{"fr":"","en":"The provision is set at the lowest possible outcome.","es":""},"correct":false,"feedback":{"fr":"","en":"Taking the minimum would ignore the most likely outcome.","es":""}},{"id":"C","text":{"fr":"","en":"The best estimate is below 500,000.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The provision is set at the arithmetic average of all possible outcomes, without weighting.","es":""},"correct":false,"feedback":{"fr":"","en":"An unweighted average does not reflect the probabilities of the outcomes.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000105","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000105","tested_point":"QST.IAS37.000105","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §42","IAS 37 §43"],"exercise":{"prompt":{"fr":"","en":"Given the uncertainty surrounding a lawsuit, Rimbelle is entitled to deliberately overstate its provision to guard against a bad surprise.","es":""},"explanation":{"fr":"","en":"Risks and uncertainties are taken into account in reaching the best estimate (IAS 37, para. 42). Caution avoids understating liabilities, but uncertainty does not justify excessive provisions or a deliberate overstatement of liabilities (IAS 37, para. 43).","es":""},"common_error":{"fr":"","en":"Confusing caution with building hidden reserves.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000106","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000106","tested_point":"QST.IAS37.000106","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §42","IAS 37 §43"],"exercise":{"prompt":{"fr":"","en":"Solvéa's advisers estimate the compensation owed to a customer at between 400,000 and 700,000, with a markedly higher probability around 450,000. The finance director recognises a provision of 700,000 \"out of prudence\". Where is the error?","es":""},"explanation":{"fr":"","en":"Risks and uncertainties are built into the best estimate (IAS 37, para. 42), but an unfavourable scenario must not be treated as more probable than it really is: uncertainty does not justify an excessive provision (IAS 37, para. 43). Taking the high end without any probability support overstates the liability.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The amount should have been discounted, as the compensation is payable within a few months.","es":""},"correct":false,"feedback":{"fr":"","en":"A maturity of a few months does not make discounting material; the error lies elsewhere.","es":""}},{"id":"B","text":{"fr":"","en":"The provision should have been equal to the low end of 400,000.","es":""},"correct":false,"feedback":{"fr":"","en":"The low end would understate the obligation given the probabilities.","es":""}},{"id":"C","text":{"fr":"","en":"No provision should have been recognised, as the outcome is uncertain.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty about the amount does not prevent recognition.","es":""}},{"id":"D","text":{"fr":"","en":"Taking the worst-case scenario deliberately overstates the provision.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000107","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000107","tested_point":"QST.IAS37.000107","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §39"],"exercise":{"prompt":{"fr":"","en":"Tarvène sold 40,000 kettles under warranty. For each kettle, the most likely outcome is no defect; the accountant therefore recognised no provision, although history shows that 2% of kettles are replaced, at 25 each. Where is the error?","es":""},"explanation":{"fr":"","en":"For a large population, the obligation is estimated by the expected value, weighting all possible outcomes by their probabilities (IAS 37, para. 39), not by the most likely outcome for each item. Expected value: 40,000 × 2% × 25 = 20,000.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The method: the expected value over the population was required, i.e. a provision of 20,000.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The calculation: the provision should have been 40,000 × 25, i.e. 1,000,000.","es":""},"correct":false,"feedback":{"fr":"","en":"This calculation assumes that every kettle will be replaced, contrary to history.","es":""}},{"id":"C","text":{"fr":"","en":"The presentation: replacements are trade payables.","es":""},"correct":false,"feedback":{"fr":"","en":"Future replacements are uncertain: they are not trade payables.","es":""}},{"id":"D","text":{"fr":"","en":"No error: the most likely outcome is always the best estimate.","es":""},"correct":false,"feedback":{"fr":"","en":"The most likely outcome applies to a single obligation, not to a large population.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000108","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000108","tested_point":"QST.IAS37.000108","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"To estimate a litigation provision, which sources can Ulvane rely on?","es":""},"explanation":{"fr":"","en":"Estimates are determined by the judgement of management, supplemented by experience of similar transactions and, in some cases, reports from independent experts; evidence provided by events after the reporting period is taken into account (IAS 37, para. 38). The aim is the amount the entity would rationally pay to settle or transfer the obligation at the reporting date (IAS 37, para. 37).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The tax saving the payment will provide.","es":""},"correct":false,"feedback":{"fr":"","en":"The tax effect is excluded: the provision is measured before tax.","es":""}},{"id":"B","text":{"fr":"","en":"Experience of similar cases.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The report of an independent expert.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The amount of the optional reserve voted by the shareholders' meeting.","es":""},"correct":false,"feedback":{"fr":"","en":"An equity reserve has nothing to do with estimating the obligation.","es":""}},{"id":"E","text":{"fr":"","en":"Information provided by events after the reporting period.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000110","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.BEST_ESTIMATE"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000110","tested_point":"QST.IAS37.000110","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000006","section_id":"best-estimate-rule"},"references":["IAS 37 §42","IAS 37 §43","IAS 37"],"exercise":{"prompt":{"fr":"","en":"For a restoration provision, Wexmoor has prepared cash flows already increased by a 15% risk margin to reflect the uncertainty about the works. Its internal auditor proposes adding to the provision a second 10% margin \"to cover the uncertainty\", on top of the 15%. What should be concluded?","es":""},"explanation":{"fr":"","en":"Risks and uncertainties are taken into account in the best estimate (IAS 37, para. 42), but duplicating adjustments for risk must be avoided, and uncertainty does not justify excessive provisions (IAS 37, para. 43). The remaining uncertainty is described in the notes, in line with the disclosure of uncertainties required for each class of provision (IAS 37, para. 44).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Add the second margin, as uncertainty is never sufficiently covered.","es":""},"correct":false,"feedback":{"fr":"","en":"Adding a second margin for the same risk counts it twice.","es":""}},{"id":"B","text":{"fr":"","en":"Remove the 15% margin and use the risk-free cost only.","es":""},"correct":false,"feedback":{"fr":"","en":"Risk must be taken into account in the estimate: the initial margin may be justified.","es":""}},{"id":"C","text":{"fr":"","en":"Do not add the second margin, which would duplicate the first, and describe the uncertainty in the notes.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Replace both margins with the cost of the worst-case scenario.","es":""},"correct":false,"feedback":{"fr":"","en":"The worst case would lead to an excessive provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000111","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000111","tested_point":"QST.IAS37.000111","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45"],"exercise":{"prompt":{"fr":"","en":"A provision is always measured at its nominal amount, whatever the timing of the cash outflow.","es":""},"explanation":{"fr":"","en":"Where the effect of the time value of money is material, the provision is the present value of the expenditures expected to be required to settle the obligation (IAS 37, para. 45). A distant outflow must therefore be discounted.","es":""},"common_error":{"fr":"","en":"Recognising a distant, material payment at its nominal amount.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000112","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000112","tested_point":"QST.IAS37.000112","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"What characteristics must the discount rate of a provision have?","es":""},"explanation":{"fr":"","en":"The rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability; it does not reflect risks for which future cash flow estimates have been adjusted (IAS 37, para. 47).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A post-tax rate, consistent with the tax measurement of the provision.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate is pre-tax, like the provision itself.","es":""}},{"id":"B","text":{"fr":"","en":"A pre-tax rate reflecting the time value of money and the liability-specific risks not reflected in the cash flows.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The entity's weighted average cost of capital, whatever the liability.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate reflects the risks specific to the liability, not the entity's overall cost of funding.","es":""}},{"id":"D","text":{"fr":"","en":"The rate applicable when the provision was first recognised, kept thereafter.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate reflects current market assessments.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000113","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000007","tested_point":"VG.IAS37.000007","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45"],"exercise":{"prompt":{"fr":"","en":"Arnavel has undertaken to clean up land whose soil it contaminated. The expenditure, estimated at {expected_outflow}, will be incurred in {years_to_settlement} years; the effect of discounting is material and the pre-tax rate used (case data) is {pre_tax_rate}%. Compute the provision at the reporting date (rounded to the nearest unit).","es":""},"explanation":{"fr":"","en":"As the effect of the time value of money is material, the provision is the present value of the expected expenditure (IAS 37, para. 45): 600,000 / 1.05^4 = 493,621 (rounded). The rate is case data; choosing it is a matter of the entity's judgement.","es":""},"common_error":{"fr":"","en":"Using the nominal amount of 600,000.","es":""},"format":"CALCULATION","placeholders":[{"id":"expected_outflow","value":"600000","unit":"EUR"},{"id":"pre_tax_rate","value":"5","unit":"PERCENT"},{"id":"years_to_settlement","value":"4","unit":"YEARS"}],"data":[{"label":{"fr":"","en":"Expected clean-up expenditure","es":""},"value":"600000","unit":"EUR"},{"label":{"fr":"","en":"Pre-tax discount rate (%)","es":""},"value":"5","unit":"PERCENT"},{"label":{"fr":"","en":"Years until the expenditure","es":""},"value":"4","unit":"YEARS"}],"steps":[{"id":"PRESENT_VALUE","label":{"fr":"","en":"Discounted provision","es":""},"answer":493621,"tolerance":1,"unit":"EUR"}],"formula":{"lines":[{"step":"PRESENT_VALUE","meaning":{"fr":"","en":"Discounted provision","es":""},"expression":"a / (1 + b)^4","variables":[{"symbol":"a","meaning":{"fr":"","en":"Expected clean-up expenditure","es":""},"value":600000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Pre-tax discount rate (%)","es":""},"value":5,"unit":"PERCENT"}],"result":493621,"unit":"EUR","rationale":{"fr":"","en":"As the effect of the time value of money is material, the provision is the present value of the expected expenditure (IAS 37, para. 45): 600,000 / 1.05^4 = 493,621 (rounded).","es":""}}],"references":["REF.IAS37.45"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000114","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000007","tested_point":"VG.IAS37.000007","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45","IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"A combined heat and power plant of Belmondane must be decommissioned in {horizon} years, at a cost estimated at {nominal_cost} at that date's prices, already adjusted for the risks specific to decommissioning. The pre-tax rate reflecting the time value of money is {discount_rate}%; the corresponding post-tax rate is {post_tax_rate}%. What provision does Belmondane recognise today (rounded to the nearest unit)?","es":""},"explanation":{"fr":"","en":"The provision is the present value of the expected expenditure (IAS 37, para. 45), discounted at a pre-tax rate that does not reflect risks already built into the cash flows (IAS 37, para. 47): the post-tax rate is rejected. 2,500,000 / 1.04^10 = 1,688,910 (rounded).","es":""},"common_error":{"fr":"","en":"Discounting at the post-tax rate.","es":""},"format":"CALCULATION","placeholders":[{"id":"nominal_cost","value":"2500000","unit":"EUR"},{"id":"discount_rate","value":"4","unit":"PERCENT"},{"id":"horizon","value":"10","unit":"YEARS"},{"id":"post_tax_rate","value":"3","unit":"PERCENT"}],"data":[{"label":{"fr":"","en":"Expected decommissioning cost","es":""},"value":"2500000","unit":"EUR"},{"label":{"fr":"","en":"Pre-tax rate (%)","es":""},"value":"4","unit":"PERCENT"},{"label":{"fr":"","en":"Years until decommissioning","es":""},"value":"10","unit":"YEARS"},{"label":{"fr":"","en":"Post-tax rate (%)","es":""},"value":"3","unit":"PERCENT"}],"steps":[{"id":"PRESENT_VALUE","label":{"fr":"","en":"Discounted provision","es":""},"answer":1688910,"tolerance":1,"unit":"EUR"}],"formula":{"lines":[{"step":"PRESENT_VALUE","meaning":{"fr":"","en":"Discounted provision","es":""},"expression":"a / (1 + b)^10","variables":[{"symbol":"a","meaning":{"fr":"","en":"Expected decommissioning cost","es":""},"value":2500000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Pre-tax rate (%)","es":""},"value":4,"unit":"PERCENT"}],"result":1688910,"unit":"EUR"}],"rationale":{"fr":"","en":"The provision is the present value of the expected expenditure (IAS 37, para. 45), discounted at a pre-tax rate that does not reflect risks already built into the cash flows (IAS 37, para. 47): the post-tax rate is rejected.","es":""},"references":["REF.IAS37.45","REF.IAS37.47"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000117","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000117","tested_point":"QST.IAS37.000117","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"Elmara estimated the cash flows for restoring a site by increasing them with a margin for the risk of cost overruns. It then discounts these cash flows at a pre-tax rate increased by a premium for the same overrun risk. Where is the error?","es":""},"explanation":{"fr":"","en":"The discount rate reflects the risks specific to the liability, but not risks for which future cash flow estimates have been adjusted (IAS 37, para. 47). The overrun risk is counted twice here: in the cash flows and in the rate.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The cash flows should have been discounted at a post-tax rate.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate is pre-tax: this point is correct.","es":""}},{"id":"B","text":{"fr":"","en":"The same risk is taken into account both in the cash flows and in the rate.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The cash flows should not have been discounted.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting is required if its effect is material; it is not at issue.","es":""}},{"id":"D","text":{"fr":"","en":"The rate should have been the one applicable when the provision was first recognised.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate reflects current market assessments; this is not the error described.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000118","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000118","tested_point":"QST.IAS37.000118","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45"],"exercise":{"prompt":{"fr":"","en":"Fervelline must decommission a test platform in 20 years, at an estimated cost of 3,000,000; the effect of discounting is material. Its accountant recognises a provision of 3,000,000. What is the error?","es":""},"explanation":{"fr":"","en":"Where the effect of the time value of money is material, the provision is the present value of the expected expenditures (IAS 37, para. 45). Recognising 3,000,000 at its nominal amount for an outflow in 20 years overstates the provision.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision is required, as the expenditure is too far off.","es":""},"correct":false,"feedback":{"fr":"","en":"The remoteness of the expenditure does not prevent the obligation from existing.","es":""}},{"id":"B","text":{"fr":"","en":"The provision should have been built up gradually over 20 years.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation exists from construction: it is not built up in annual instalments.","es":""}},{"id":"C","text":{"fr":"","en":"The provision should have been discounted.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The provision should have been increased by 20 years of inflation and then recognised without discounting.","es":""},"correct":false,"feedback":{"fr":"","en":"Without discounting, the provision would remain overstated.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000119","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000119","tested_point":"QST.IAS37.000119","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"Galdrian must choose the discount rate for a restoration provision whose cash flows are already adjusted for all the risks specific to the obligation. It has four rates: 3.1% (post-tax risk-free rate), 6% (pre-tax rate including a premium for the obligation's risks), 4.2% (pre-tax rate reflecting only the current time value of money) and 2.5% (rate used when the provision was set up six years ago). Which rate should be used?","es":""},"explanation":{"fr":"","en":"The rate is pre-tax, reflects current market assessments of the time value of money and does not reflect risks already taken into account in the cash flows (IAS 37, para. 47). As the cash flows are already adjusted for all risks, the 4.2% rate is appropriate; 6% would count the risks twice.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"3.1%, more prudent because lower.","es":""},"correct":false,"feedback":{"fr":"","en":"A post-tax rate is excluded: the provision is measured before tax.","es":""}},{"id":"B","text":{"fr":"","en":"6%, which reflects the obligation's specific risks.","es":""},"correct":false,"feedback":{"fr":"","en":"The risks are already built into the cash flows: reflecting them again in the rate would duplicate them.","es":""}},{"id":"C","text":{"fr":"","en":"4.2%.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"2.5%, to ensure consistency of methods.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate must reflect current market assessments.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000120","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000120","tested_point":"QST.IAS37.000120","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"An entity may discount a provision at a post-tax rate as long as it applies that rate consistently.","es":""},"explanation":{"fr":"","en":"The discount rate or rates are pre-tax rates (IAS 37, para. 47): consistent application does not make a post-tax rate acceptable.","es":""},"common_error":{"fr":"","en":"Choosing a post-tax rate for consistency with the tax computation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000121","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000121","tested_point":"QST.IAS37.000121","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §45","IAS 37","IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"Hirvane has two provisions at its reporting date: (1) a settlement payment of 120,000 due in three months; (2) an obligation to restore a mining site, of 4,000,000, to be carried out in twelve years. How should discounting be dealt with?","es":""},"explanation":{"fr":"","en":"An outflow arising soon after the reporting date is more onerous than one of the same amount arising later (IAS 37, para. 46); a provision is discounted where the effect of the time value of money is material (IAS 37, para. 45). For the payment in three months, the effect is generally negligible; for the restoration in twelve years, it is material and the provision is discounted at an appropriate pre-tax rate (IAS 37, para. 47). Assessing materiality is a matter of judgement.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Discount both provisions for consistency.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting depends on whether its effect is material, not on a consistency rule.","es":""}},{"id":"B","text":{"fr":"","en":"Do not discount the settlement payment; discount the restoration at a pre-tax rate.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Discount neither, discounting being optional.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting is required when its effect is material.","es":""}},{"id":"D","text":{"fr":"","en":"Discount only the settlement payment, which is due first.","es":""},"correct":false,"feedback":{"fr":"","en":"It is the other way round: the distant outflow is the one for which discounting matters.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000122","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.PRESENT_VALUE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000122","tested_point":"QST.IAS37.000122","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"discounting-rule"},"references":["IAS 37 §47"],"exercise":{"prompt":{"fr":"","en":"Isomarel estimates the cash flows for decommissioning a terminal in amounts not adjusted for risk. The risks specific to the obligation (technical uncertainty, delays) are therefore not reflected in the cash flows. How should the discount rate take them into account?","es":""},"explanation":{"fr":"","en":"The discount rate reflects the risks specific to the liability that have not been taken into account in the cash flow estimates (IAS 37, para. 47). As the cash flows are not adjusted, the pre-tax rate must include these specific risks; how to measure them is a matter of judgement.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It must reflect no risk, only the time value of money counting.","es":""},"correct":false,"feedback":{"fr":"","en":"Where the cash flows do not reflect the specific risks, the rate must reflect them.","es":""}},{"id":"B","text":{"fr":"","en":"It must reflect, before tax, the risks specific to the liability that are not built into the cash flows.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"It must be a post-tax rate increased by a risk premium.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate is always pre-tax.","es":""}},{"id":"D","text":{"fr":"","en":"It must be the terminal's historical borrowing rate.","es":""},"correct":false,"feedback":{"fr":"","en":"The rate reflects current market assessments, not a historical borrowing rate.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000123","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000123","tested_point":"QST.IAS37.000123","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §51"],"exercise":{"prompt":{"fr":"","en":"The gain expected on the sale of land, linked to the closure of a site, is deducted from the provision for closure costs.","es":""},"explanation":{"fr":"","en":"Gains from the expected disposal of assets are not taken into account in measuring a provision (IAS 37, para. 51).","es":""},"common_error":{"fr":"","en":"Presenting a closure provision net of the expected sale proceeds.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000124","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000124","tested_point":"QST.IAS37.000124","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48"],"exercise":{"prompt":{"fr":"","en":"Under what condition is a future event that may change the cost of settling an obligation reflected in the provision?","es":""},"explanation":{"fr":"","en":"Future events that may affect the amount required to settle an obligation are reflected in the provision where there is sufficient objective evidence that they will occur (IAS 37, para. 48).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As soon as management hopes for it.","es":""},"correct":false,"feedback":{"fr":"","en":"Management's hope is not objective evidence.","es":""}},{"id":"B","text":{"fr":"","en":"Only if it is favourable to the entity.","es":""},"correct":false,"feedback":{"fr":"","en":"The direction of the effect does not matter: only the existence of objective evidence counts.","es":""}},{"id":"C","text":{"fr":"","en":"Never: the provision reflects only the past situation.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard allows supported future events to be taken into account.","es":""}},{"id":"D","text":{"fr":"","en":"If there is sufficient objective evidence that it will occur.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000125","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000125","tested_point":"QST.IAS37.000125","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48","IAS 37 §49"],"exercise":{"prompt":{"fr":"","en":"Jalvane will have to clean up a site in eight years. The cost, using proven techniques, is estimated at 2,000,000. A laboratory is testing an entirely new biological process that could halve this cost; no industrial-scale trial has yet succeeded. What cost should be used?","es":""},"explanation":{"fr":"","en":"A future event is reflected only if there is sufficient objective evidence that it will occur (IAS 37, para. 48). An entirely new technology is anticipated only if such evidence supports it; the amount reflects the reasonable expectations of technically qualified, objective observers (IAS 37, para. 49). As the experimental process is not supported, the cost of the proven techniques is used.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"1,000,000, anticipating the biological process.","es":""},"correct":false,"feedback":{"fr":"","en":"The process is not supported by sufficient objective evidence.","es":""}},{"id":"B","text":{"fr":"","en":"2,000,000, the cost of the proven techniques.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"1,500,000, the average of the two assumptions.","es":""},"correct":false,"feedback":{"fr":"","en":"An arbitrary average does not reflect reasonable, objective expectations.","es":""}},{"id":"D","text":{"fr":"","en":"No amount until the technical choice has been made.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation exists: it is measured on the basis of the proven technology.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000126","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000126","tested_point":"QST.IAS37.000126","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48","IAS 37 §49"],"exercise":{"prompt":{"fr":"","en":"Each year, Kervane decommissions several similar installations using an existing technique. Independent technical studies, based on its recent projects, show that the experience gained will reduce by 10% the cost of the decommissioning planned in five years. Can it take this into account?","es":""},"explanation":{"fr":"","en":"Future events are reflected where there is sufficient objective evidence (IAS 37, para. 48). Cost reductions associated with increased experience in applying existing technology may be included, based on the reasonable expectations of qualified, objective observers (IAS 37, para. 49). The independent studies provide this evidence.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, as the reduction is supported by objective evidence on an existing technology.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"No, no future reduction can be anticipated.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard allows cost reductions supported by experience gained.","es":""}},{"id":"C","text":{"fr":"","en":"Yes, but only once the decommissioning has actually been carried out.","es":""},"correct":false,"feedback":{"fr":"","en":"It is taken into account in the current estimate, without waiting for the works.","es":""}},{"id":"D","text":{"fr":"","en":"No, unless the reduction results from an entirely new technology.","es":""},"correct":false,"feedback":{"fr":"","en":"It is the other way round: an entirely new technology requires particularly strong evidence.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000127","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000127","tested_point":"QST.IAS37.000127","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §50"],"exercise":{"prompt":{"fr":"","en":"Lumenord is measuring an existing restoration obligation. Possible new legislation would tighten restoration standards. When does it take this into account in the measurement?","es":""},"explanation":{"fr":"","en":"The effect of possible new legislation is taken into account in measuring an existing obligation when sufficient objective evidence exists that the legislation is virtually certain to be enacted (IAS 37, para. 50).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As soon as a bill is mentioned publicly.","es":""},"correct":false,"feedback":{"fr":"","en":"A mere mention is not sufficient objective evidence.","es":""}},{"id":"B","text":{"fr":"","en":"When sufficient objective evidence shows that enactment is virtually certain.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Only after the law has actually come into force.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard does not require waiting for the law to come into force.","es":""}},{"id":"D","text":{"fr":"","en":"Never: only existing legislation counts.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard allows a virtually certain future law to be taken into account.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000128","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000128","tested_point":"QST.IAS37.000128","difficulty":"ADVANCED","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §50"],"exercise":{"prompt":{"fr":"","en":"To include in its clean-up provision the effect of a stricter future law, what evidence must Moravel have?","es":""},"explanation":{"fr":"","en":"There must be sufficient objective evidence that the legislation is virtually certain to be enacted, which requires evidence both of what the legislation will demand and of whether it is virtually certain to be enacted and implemented (IAS 37, para. 50).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A statement of intent by a politician.","es":""},"correct":false,"feedback":{"fr":"","en":"A statement of intent establishes neither the content nor virtual certainty.","es":""}},{"id":"B","text":{"fr":"","en":"Evidence of what the legislation will demand.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"An internal opinion of the legal department considering enactment \"possible\".","es":""},"correct":false,"feedback":{"fr":"","en":"A merely possible enactment does not reach the threshold.","es":""}},{"id":"D","text":{"fr":"","en":"Evidence that enactment and implementation of the law are virtually certain.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"A study proving that the law would be favourable to the entity.","es":""},"correct":false,"feedback":{"fr":"","en":"Whether the law is favourable or unfavourable has no bearing on the threshold.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000129","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000129","tested_point":"QST.IAS37.000129","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §51","IAS 37 §52"],"exercise":{"prompt":{"fr":"","en":"Norvessa must clean up, for 650,000, an industrial site it is going to close; it then expects to sell the land at a gain of 400,000. The sale is closely linked to the closure. What amount should be provided for?","es":""},"explanation":{"fr":"","en":"Gains from the expected disposal of assets are not taken into account in measuring a provision (IAS 37, para. 51), even if the expected disposal is closely linked to the event giving rise to the provision; they are recognised at the time specified by the standard dealing with the assets concerned (IAS 37, para. 52). Provision: 650,000.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"250,000, i.e. the cost net of the disposal gain.","es":""},"correct":false,"feedback":{"fr":"","en":"The disposal gain is not deducted from the provision.","es":""}},{"id":"B","text":{"fr":"","en":"No provision, as the disposal gain covers the cost.","es":""},"correct":false,"feedback":{"fr":"","en":"A future gain does not offset the present obligation.","es":""}},{"id":"C","text":{"fr":"","en":"650,000.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"400,000, the amount of the expected gain.","es":""},"correct":false,"feedback":{"fr":"","en":"The expected gain has nothing to do with measuring the obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000130","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000130","tested_point":"QST.IAS37.000130","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §52"],"exercise":{"prompt":{"fr":"","en":"A gain expected on the disposal of assets is excluded from the provision even if the disposal is closely linked to the event giving rise to it; the gain is recognised at the time specified by the standard dealing with the assets concerned.","es":""},"explanation":{"fr":"","en":"Expected disposal gains are excluded from the measurement of the provision, even where closely linked to the originating event; their recognition follows the standard dealing with the assets concerned (IAS 37, para. 52).","es":""},"common_error":{"fr":"","en":"Anticipating a disposal gain by reducing a provision.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000131","standard_id":"IAS37","concept_ids":["IAS37.MEASUREMENT.FUTURE_EVENTS_AND_DISPOSALS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000131","tested_point":"QST.IAS37.000131","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000007","section_id":"future-events"},"references":["IAS 37 §48","IAS 37 §50"],"exercise":{"prompt":{"fr":"","en":"Ombrée has an obligation to restore a landfill in ten years. A draft regulation, still under consultation and whose content changes from one version to the next, could require a thicker cover and increase the cost by 30%. What is the effect on the provision at the reporting date?","es":""},"explanation":{"fr":"","en":"A future event is reflected only on sufficient objective evidence (IAS 37, para. 48); for new legislation, there must be evidence of its content and of the virtual certainty of its enactment (IAS 37, para. 50). The draft under consultation, with unstable content, does not meet these conditions: the provision remains measured under current requirements.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Increase the provision by 30% out of prudence.","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not replace the required objective evidence.","es":""}},{"id":"B","text":{"fr":"","en":"Increase the provision by 15%, as enactment is uncertain.","es":""},"correct":false,"feedback":{"fr":"","en":"An arbitrary weighting does not meet the virtual certainty threshold.","es":""}},{"id":"C","text":{"fr":"","en":"Remove the provision until the regulation is adopted.","es":""},"correct":false,"feedback":{"fr":"","en":"The existing obligation remains; only the measurement of the future effect is at issue.","es":""}},{"id":"D","text":{"fr":"","en":"No effect: enactment is not virtually certain and the content has not been settled.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000132","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000132","tested_point":"QST.IAS37.000132","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53"],"exercise":{"prompt":{"fr":"","en":"A reimbursement expected from an insurer is recognised as soon as it is probable.","es":""},"explanation":{"fr":"","en":"The reimbursement is recognised only when it is virtually certain to be received if the entity settles the obligation; it is then treated as a separate asset (IAS 37, para. 53).","es":""},"common_error":{"fr":"","en":"Recognising a receivable from an insurer that disputes its cover.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000133","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000133","tested_point":"QST.IAS37.000133","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53"],"exercise":{"prompt":{"fr":"","en":"How does Pellarine present in its statement of financial position a provision of 200,000 and a virtually certain reimbursement of 120,000 expected from its insurer?","es":""},"explanation":{"fr":"","en":"The virtually certain reimbursement is treated as a separate asset, whose amount may not exceed that of the provision (IAS 37, para. 53): the provision remains a liability of 200,000 and the reimbursement asset is presented at 120,000.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A net provision of 80,000.","es":""},"correct":false,"feedback":{"fr":"","en":"Offsetting the provision and the reimbursement in the statement of financial position is not allowed.","es":""}},{"id":"B","text":{"fr":"","en":"A provision of 200,000 and a separate asset of 120,000.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A provision of 200,000 only, with the reimbursement disclosed in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"A virtually certain reimbursement is recognised, not merely disclosed.","es":""}},{"id":"D","text":{"fr":"","en":"A net asset of 120,000 offset in equity.","es":""},"correct":false,"feedback":{"fr":"","en":"No offsetting through equity is provided for.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000134","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000009","tested_point":"VG.IAS37.000009","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53","IAS 37 §54"],"exercise":{"prompt":{"fr":"","en":"Quilmar recognises a provision of {provision_amount} for fire damage caused to a customer. Its insurer has confirmed in writing that it will cover {virtually_certain_reimbursement}, an amount virtually certain to be received if Quilmar compensates the customer. Compute the reimbursement asset and the net expense if Quilmar presents the expense net of the reimbursement in profit or loss.","es":""},"explanation":{"fr":"","en":"The virtually certain reimbursement is a separate asset, capped at the amount of the provision (IAS 37, para. 53): 180,000, which is below 300,000. The expense may be presented net of the amount recognised for the reimbursement (IAS 37, para. 54): 300,000 − 180,000 = 120,000. Net presentation is an option chosen by Quilmar (case data).","es":""},"common_error":{"fr":"","en":"Reducing the provision instead of recognising a separate asset.","es":""},"format":"CALCULATION","placeholders":[{"id":"provision_amount","value":"300000","unit":"EUR"},{"id":"virtually_certain_reimbursement","value":"180000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Provision","es":""},"value":"300000","unit":"EUR"},{"label":{"fr":"","en":"Virtually certain reimbursement","es":""},"value":"180000","unit":"EUR"}],"steps":[{"id":"REIMBURSEMENT_ASSET","label":{"fr":"","en":"Reimbursement asset","es":""},"answer":180000,"tolerance":0,"unit":"EUR"},{"id":"NET_EXPENSE","label":{"fr":"","en":"Net expense presented","es":""},"answer":120000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"NET_EXPENSE","meaning":{"fr":"","en":"Net expense presented","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Provision","es":""},"value":300000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Virtually certain reimbursement","es":""},"value":180000,"unit":"EUR"}],"result":120000,"unit":"EUR","rationale":{"fr":"","en":"The expense may be presented net of the amount recognised for the reimbursement (IAS 37, para. 54): 300,000 − 180,000 = 120,000.","es":""}}],"references":["REF.IAS37.53","REF.IAS37.54"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000135","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000009","tested_point":"VG.IAS37.000009","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53","IAS 37 §54"],"exercise":{"prompt":{"fr":"","en":"Rovalis provides {recall_provision} for the recall of defective toys. The manufacturer of the faulty parts has irrevocably undertaken to pay it {indemnity_confirmed}, including a commercial compensation; this payment is virtually certain if Rovalis carries out the recall. Compute the reimbursement asset recognised and the net expense presented (option chosen by Rovalis).","es":""},"explanation":{"fr":"","en":"The reimbursement is a separate asset whose amount may not exceed that of the provision (IAS 37, para. 53): the asset is capped at 95,000. The expense presented net of the reimbursement recognised is 95,000 − 95,000 = 0 (IAS 37, para. 54). The excess of 110,000 − 95,000 = 15,000 is not recognised as a reimbursement of the provision.","es":""},"common_error":{"fr":"","en":"Recognising an asset of 110,000 and a net gain on the recall.","es":""},"format":"CALCULATION","placeholders":[{"id":"recall_provision","value":"95000","unit":"EUR"},{"id":"indemnity_confirmed","value":"110000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Recall provision","es":""},"value":"95000","unit":"EUR"},{"label":{"fr":"","en":"Manufacturer's confirmed payment","es":""},"value":"110000","unit":"EUR"}],"steps":[{"id":"REIMBURSEMENT_ASSET","label":{"fr":"","en":"Reimbursement asset","es":""},"answer":95000,"tolerance":0,"unit":"EUR"},{"id":"NET_EXPENSE","label":{"fr":"","en":"Net expense presented","es":""},"answer":0,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000138","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000138","tested_point":"QST.IAS37.000138","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §57"],"exercise":{"prompt":{"fr":"","en":"Ulmeta has engaged a subcontractor to remove asbestos from a building. The contract signed with the owner provides that this subcontractor pays directly the costs of making safe an incident that occurred in 20X5, Ulmeta not being liable for them if the subcontractor fails to pay. How does Ulmeta account for these costs?","es":""},"explanation":{"fr":"","en":"Where the entity will not be liable for the costs if the third party fails to pay, it has no liability for those costs, and they are not included in the provision (IAS 37, para. 57).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It provides for the costs and recognises a reimbursement of the same amount.","es":""},"correct":false,"feedback":{"fr":"","en":"There is nothing to provide for: Ulmeta is not liable for the costs.","es":""}},{"id":"B","text":{"fr":"","en":"It has no liability for these costs: they are excluded from the provision.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"It provides for the costs without recognising any reimbursement.","es":""},"correct":false,"feedback":{"fr":"","en":"Ulmeta has no obligation for these costs.","es":""}},{"id":"D","text":{"fr":"","en":"It discloses them as a contingent liability because of the subcontractor's possible default.","es":""},"correct":false,"feedback":{"fr":"","en":"As Ulmeta is not liable if the third party defaults, it has no possible obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000139","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000139","tested_point":"QST.IAS37.000139","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §56","IAS 37 §57"],"exercise":{"prompt":{"fr":"","en":"Vélanne is ordered to pay 500,000 to a customer. Its insurer has confirmed it will cover 350,000, which is virtually certain; if the insurer did not pay, Vélanne would remain liable for the full amount. What is the treatment in the statement of financial position?","es":""},"explanation":{"fr":"","en":"In most cases, the entity remains liable for the whole amount: the provision is recognised for the full amount of the liability, and a separate asset for the expected reimbursement when it is virtually certain (IAS 37, para. 56). Only if the entity were not liable in the event of the third party's default would the costs be excluded (IAS 37, para. 57).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision of 500,000 and a reimbursement asset of 350,000.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"A provision of 150,000, the part Vélanne will ultimately bear.","es":""},"correct":false,"feedback":{"fr":"","en":"Vélanne remains liable for the whole amount: the provision is not net.","es":""}},{"id":"C","text":{"fr":"","en":"A provision of 500,000, with the insurance recovery merely disclosed.","es":""},"correct":false,"feedback":{"fr":"","en":"The virtually certain reimbursement is recognised as a separate asset.","es":""}},{"id":"D","text":{"fr":"","en":"No provision, as the insurer covers most of it.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation to the customer exists for the whole amount.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000140","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000140","tested_point":"QST.IAS37.000140","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §53"],"exercise":{"prompt":{"fr":"","en":"Wilmara provided 70,000 for a loss caused to a third party. Its insurer will virtually certainly pay it 90,000, an amount that includes ancillary costs. The accountant recognised a reimbursement asset of 90,000 and a net gain of 20,000 on the claim. What is the error?","es":""},"explanation":{"fr":"","en":"The reimbursement is treated as a separate asset whose amount may not exceed that of the provision (IAS 37, para. 53): the reimbursement asset is limited to 70,000 and no net gain arises in respect of the provision.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The reimbursement should only have been disclosed in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"A virtually certain reimbursement is recognised, not merely disclosed.","es":""}},{"id":"B","text":{"fr":"","en":"The provision should have been presented net of the reimbursement.","es":""},"correct":false,"feedback":{"fr":"","en":"Offsetting in the statement of financial position is not allowed.","es":""}},{"id":"C","text":{"fr":"","en":"The reimbursement asset cannot exceed the provision: it is limited to 70,000.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The provision should have been increased to 90,000.","es":""},"correct":false,"feedback":{"fr":"","en":"The provision reflects the best estimate of the obligation, not the amount reimbursed.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000141","standard_id":"IAS37","concept_ids":["IAS37.REIMBURSEMENTS.RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000141","tested_point":"QST.IAS37.000141","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000008","section_id":"virtually-certain"},"references":["IAS 37 §54","IAS 37 §55"],"exercise":{"prompt":{"fr":"","en":"In the statement presenting profit or loss, the expense relating to a provision may be presented net of the amount recognised for a reimbursement, for example from an insurer.","es":""},"explanation":{"fr":"","en":"An entity may sometimes look to another party (insurance, indemnity clauses, suppliers' warranties) (IAS 37, para. 55); the expense relating to the provision may then be presented net of the amount recognised for the reimbursement (IAS 37, para. 54). In the statement of financial position, however, the provision and the asset remain separate.","es":""},"common_error":{"fr":"","en":"Extending offsetting to the statement of financial position.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000142","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000142","tested_point":"QST.IAS37.000142","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate.","es":""},"explanation":{"fr":"","en":"Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate (IAS 37, para. 59).","es":""},"common_error":{"fr":"","en":"Keeping the initial amount of the provision without review.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000143","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000143","tested_point":"QST.IAS37.000143","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"A provision for which an outflow of resources is no longer probable is kept until the end of the proceedings that gave rise to it.","es":""},"explanation":{"fr":"","en":"If an outflow of resources is no longer probable to settle the obligation, the provision is reversed (IAS 37, para. 59).","es":""},"common_error":{"fr":"","en":"Keeping a provision that is no longer needed as a precautionary reserve.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000144","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000144","tested_point":"QST.IAS37.000144","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §61"],"exercise":{"prompt":{"fr":"","en":"For which expenditures may a provision be used?","es":""},"explanation":{"fr":"","en":"A provision is used only for the expenditures for which it was originally recognised (IAS 37, para. 61).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"For any unforeseen expenditure of the period, at management's discretion and up to the balance available.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision is not a general reserve at management's disposal.","es":""}},{"id":"B","text":{"fr":"","en":"For any expenditure of the same amount, whatever its nature.","es":""},"correct":false,"feedback":{"fr":"","en":"What matters is the nature of the expenditure, not its amount.","es":""}},{"id":"C","text":{"fr":"","en":"Only for the expenditures for which it was set up.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"For the expenditures of another provision that has become insufficient.","es":""},"correct":false,"feedback":{"fr":"","en":"Each provision covers its own purpose: no transfers between provisions.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000145","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000145","tested_point":"QST.IAS37.000145","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §61","IAS 37 §62"],"exercise":{"prompt":{"fr":"","en":"Xelmont may charge its restructuring costs against the excess of its litigation provision, which has become too high, rather than reversing that excess.","es":""},"explanation":{"fr":"","en":"A provision is used only for the expenditures for which it was recognised (IAS 37, para. 61); setting expenditures against a provision recognised for another purpose would conceal the impact of two different events (IAS 37, para. 62). The excess is reversed and the restructuring costs follow their own treatment.","es":""},"common_error":{"fr":"","en":"Using an excess provision as a pool for other expenditures.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000146","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000011","tested_point":"VG.IAS37.000011","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"At 1 January 20X6, Yvrande's discounted restoration provision amounts to {opening_provision}, computed at a rate of {discount_rate}%. No other change occurs in 20X6. Compute the unwinding of the discount for 20X6.","es":""},"explanation":{"fr":"","en":"Where a provision is discounted, its carrying amount increases in each period to reflect the passage of time; this increase is recognised as borrowing cost (IAS 37, para. 60): 450,000 × 6% = 27,000.","es":""},"common_error":{"fr":"","en":"Applying the rate to the future nominal cost.","es":""},"format":"CALCULATION","placeholders":[{"id":"opening_provision","value":"450000","unit":"EUR"},{"id":"discount_rate","value":"6","unit":"PERCENT"}],"data":[{"label":{"fr":"","en":"Opening discounted provision","es":""},"value":"450000","unit":"EUR"},{"label":{"fr":"","en":"Discount rate (%)","es":""},"value":"6","unit":"PERCENT"}],"steps":[{"id":"UNWINDING","label":{"fr":"","en":"Unwinding of the discount for the period","es":""},"answer":27000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"UNWINDING","meaning":{"fr":"","en":"Unwinding of the discount for the period","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Opening discounted provision","es":""},"value":450000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Discount rate (%)","es":""},"value":6,"unit":"PERCENT"}],"result":27000,"unit":"EUR"}],"references":["REF.IAS37.60"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000147","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000011","tested_point":"VG.IAS37.000011","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"Zelvane's provision for decommissioning an offshore wind turbine, whose future nominal cost is estimated at {nominal_cost}, is carried at {carrying_amount_start} in the opening statement of financial position, discounted at {rate}%. What expense due to the passage of time does Zelvane recognise for the year, with no other change?","es":""},"explanation":{"fr":"","en":"The increase in the carrying amount due to the passage of time is recognised as borrowing cost (IAS 37, para. 60). It is computed on the opening discounted amount, not on the nominal cost: 1,284,000 × 3.5% = 44,940.","es":""},"common_error":{"fr":"","en":"Computing the unwinding on the nominal cost of 1,700,000.","es":""},"format":"CALCULATION","placeholders":[{"id":"carrying_amount_start","value":"1284000","unit":"EUR"},{"id":"rate","value":"3.5","unit":"PERCENT"},{"id":"nominal_cost","value":"1700000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Opening carrying amount of the provision","es":""},"value":"1284000","unit":"EUR"},{"label":{"fr":"","en":"Discount rate (%)","es":""},"value":"3.5","unit":"PERCENT"},{"label":{"fr":"","en":"Future nominal cost","es":""},"value":"1700000","unit":"EUR"}],"steps":[{"id":"UNWINDING","label":{"fr":"","en":"Borrowing cost (unwinding)","es":""},"answer":44940,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"UNWINDING","meaning":{"fr":"","en":"Borrowing cost (unwinding)","es":""},"expression":"a * b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Opening carrying amount of the provision","es":""},"value":1284000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Discount rate (%)","es":""},"value":3.5,"unit":"PERCENT"}],"result":44940,"unit":"EUR"}],"rationale":{"fr":"","en":"The increase in the carrying amount due to the passage of time is recognised as borrowing cost (IAS 37, para. 60).","es":""},"references":["REF.IAS37.60"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000151","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"CALCULATION","context":"V1_QST.IAS37.000151","tested_point":"QST.IAS37.000151","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"At the reporting date, Dumarec reviews its provision for a commercial dispute, carried at {carrying_amount}. New evidence in the case brings the current best estimate to {revised_estimate}. Compute the additional provision expense for the year.","es":""},"explanation":{"fr":"","en":"Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate (IAS 37, para. 59): 455,000 − 380,000 = 75,000 additional expense.","es":""},"common_error":{"fr":"","en":"Recognising a new provision of 455,000 in addition to the existing one.","es":""},"format":"CALCULATION","placeholders":[{"id":"carrying_amount","value":"380000","unit":"EUR"},{"id":"revised_estimate","value":"455000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Provision before review","es":""},"value":"380000","unit":"EUR"},{"label":{"fr":"","en":"Current best estimate","es":""},"value":"455000","unit":"EUR"}],"steps":[{"id":"ADJUSTMENT","label":{"fr":"","en":"Additional provision expense","es":""},"answer":75000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"ADJUSTMENT","meaning":{"fr":"","en":"Additional provision expense","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Current best estimate","es":""},"value":455000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provision before review","es":""},"value":380000,"unit":"EUR"}],"result":75000,"unit":"EUR","rationale":{"fr":"","en":"Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate (IAS 37, para. 59): 455,000 − 380,000 = 75,000 additional expense.","es":""}}],"references":["REF.IAS37.59"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000152","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000152","tested_point":"QST.IAS37.000152","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §60"],"exercise":{"prompt":{"fr":"","en":"Évrane recognised the annual unwinding of the discount on its decommissioning provision, i.e. 31,000, within \"operating provision expenses\", together with the new provisions for the year. What is the error?","es":""},"explanation":{"fr":"","en":"Where a provision is discounted, the increase in its carrying amount due to the passage of time is recognised as borrowing cost (IAS 37, para. 60), not with operating provision expenses.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The unwinding is a borrowing cost, not an operating provision expense.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The amount should have been computed on the future nominal cost.","es":""},"correct":false,"feedback":{"fr":"","en":"The computation is based on the opening discounted amount; this is not the error described.","es":""}},{"id":"C","text":{"fr":"","en":"The unwinding should have been taken directly to equity, outside profit or loss.","es":""},"correct":false,"feedback":{"fr":"","en":"The unwinding goes through profit or loss.","es":""}},{"id":"D","text":{"fr":"","en":"The unwinding should not be recognised before decommissioning.","es":""},"correct":false,"feedback":{"fr":"","en":"The increase due to the passage of time is recognised in each period.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000153","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000153","tested_point":"QST.IAS37.000153","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §61","IAS 37 §62"],"exercise":{"prompt":{"fr":"","en":"Fargel has a provision of 150,000 for a dispute that will ultimately be settled for 60,000. Its accountant charges against the balance of 90,000 the costs of relocating an administrative department, incurred during the year, instead of expensing them. What is the error?","es":""},"explanation":{"fr":"","en":"A provision is used only for the expenditures for which it was set up (IAS 37, para. 61). Charging the relocation costs against the litigation provision would conceal the impact of two different events (IAS 37, para. 62): the balance no longer needed must be reversed and the costs expensed.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The relocation costs should have been the subject of a new provision.","es":""},"correct":false,"feedback":{"fr":"","en":"The costs have already been incurred: there is no provision to set up, only an expense.","es":""}},{"id":"B","text":{"fr":"","en":"The provision can only be used for the dispute: the balance must be reversed and the costs expensed.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The balance of 90,000 should have been kept until the end of the following year.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision that is no longer needed is reversed without delay.","es":""}},{"id":"D","text":{"fr":"","en":"The provision should have been increased to 240,000 to cover both expenditures.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision is not a pool for miscellaneous expenditures.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000154","standard_id":"IAS37","concept_ids":["IAS37.SUBSEQUENT.CHANGES_AND_USE"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000154","tested_point":"QST.IAS37.000154","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000009","section_id":"review-each-period"},"references":["IAS 37 §59"],"exercise":{"prompt":{"fr":"","en":"During the year, a customer of Galmont dropped the action it had brought; no outflow of resources is probable any more. What happens to the provision of 120,000 recognised last year?","es":""},"explanation":{"fr":"","en":"If an outflow of resources is no longer probable to settle the obligation, the provision is reversed (IAS 37, para. 59).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"It is kept out of prudence until the action becomes time-barred.","es":""},"correct":false,"feedback":{"fr":"","en":"Prudence does not justify keeping a provision that is no longer needed.","es":""}},{"id":"B","text":{"fr":"","en":"It is reversed.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"It is transferred to equity.","es":""},"correct":false,"feedback":{"fr":"","en":"No transfer to equity is provided for.","es":""}},{"id":"D","text":{"fr":"","en":"It is reassigned to other risks of the year.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision cannot be reassigned to another purpose.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000155","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000155","tested_point":"QST.IAS37.000155","difficulty":"BEGINNER","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63"],"exercise":{"prompt":{"fr":"","en":"No provision is recognised for future operating losses.","es":""},"explanation":{"fr":"","en":"The standard prohibits recognising a provision for future operating losses (IAS 37, para. 63).","es":""},"common_error":{"fr":"","en":"Providing for the budgeted losses of a loss-making business.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000156","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000156","tested_point":"QST.IAS37.000156","difficulty":"BEGINNER","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63"],"exercise":{"prompt":{"fr":"","en":"The retail chain Halvorine forecasts, for its network of town-centre shops, an operating loss of 1,200,000 in 20X6. What does it recognise at 31 December 20X5 for this loss?","es":""},"explanation":{"fr":"","en":"No provision is recognised for future operating losses (IAS 37, para. 63).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision of 1,200,000, as the loss is budgeted and quantified by management control.","es":""},"correct":false,"feedback":{"fr":"","en":"A budgeted loss is not a present obligation.","es":""}},{"id":"B","text":{"fr":"","en":"A provision equal to half the loss, given the uncertainties about the economic outlook.","es":""},"correct":false,"feedback":{"fr":"","en":"No portion of a future loss is provided for.","es":""}},{"id":"C","text":{"fr":"","en":"A contingent liability of 1,200,000 disclosed in the notes, the loss being merely possible.","es":""},"correct":false,"feedback":{"fr":"","en":"A future loss is neither a present nor a possible obligation towards a third party.","es":""}},{"id":"D","text":{"fr":"","en":"Nothing.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000157","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000157","tested_point":"QST.IAS37.000157","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §64"],"exercise":{"prompt":{"fr":"","en":"Why can future operating losses not be provided for?","es":""},"explanation":{"fr":"","en":"Future operating losses meet neither the definition of a liability nor the general recognition criteria for provisions (IAS 37, para. 64): no present obligation arises from a past event.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Because they can never be reliably estimated, even through a detailed and approved budget.","es":""},"correct":false,"feedback":{"fr":"","en":"A budget can provide an estimate; the reason is the absence of a present obligation.","es":""}},{"id":"B","text":{"fr":"","en":"Because they meet neither the definition of a liability nor the recognition criteria.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Because they are already covered by the depreciation of the assets of the business concerned.","es":""},"correct":false,"feedback":{"fr":"","en":"Depreciation has nothing to do with the question of the obligation.","es":""}},{"id":"D","text":{"fr":"","en":"Because they fall under IAS 12 owing to their future tax consequences.","es":""},"correct":false,"feedback":{"fr":"","en":"IAS 12 deals with tax, not with future operating losses.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000158","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000158","tested_point":"QST.IAS37.000158","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §65"],"exercise":{"prompt":{"fr":"","en":"An expectation of future operating losses indicates that certain assets of the business may be impaired; the entity then tests them for impairment under IAS 36.","es":""},"explanation":{"fr":"","en":"An expectation of future operating losses is an indication that certain assets of the business may be impaired: the entity tests them under IAS 36 (IAS 37, para. 65).","es":""},"common_error":{"fr":"","en":"Ignoring the impairment test after ruling out the provision.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000159","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000159","tested_point":"QST.IAS37.000159","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63"],"exercise":{"prompt":{"fr":"","en":"At 31 December 20X5, Idrane recognised a \"provision for 20X6 operating losses\" of 430,000 for its vehicle hire subsidiary, whose 20X6 budget shows a loss. What is the error?","es":""},"explanation":{"fr":"","en":"No provision is recognised for future operating losses (IAS 37, para. 63): the provision must be cancelled.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The provision should have been presented as a trade payable of the period.","es":""},"correct":false,"feedback":{"fr":"","en":"It is not a payable: no obligation exists.","es":""}},{"id":"B","text":{"fr":"","en":"A provision for future operating losses is prohibited.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The amount should have been discounted.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting is not the point: the provision should not exist.","es":""}},{"id":"D","text":{"fr":"","en":"The provision should have been built up over two years.","es":""},"correct":false,"feedback":{"fr":"","en":"No spreading makes a provision for future losses acceptable.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000160","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000160","tested_point":"QST.IAS37.000160","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §65"],"exercise":{"prompt":{"fr":"","en":"Jomarel expects operating losses at its profiles plant for the next three years. What must it do at the reporting date?","es":""},"explanation":{"fr":"","en":"A provision for future losses is ruled out, but the expectation of losses is an indication that the plant's assets may be impaired: Jomarel tests them for impairment under IAS 36 (IAS 37, para. 65).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provide for the losses of the three years, as they are reliably quantified.","es":""},"correct":false,"feedback":{"fr":"","en":"Future losses are not provided for.","es":""}},{"id":"B","text":{"fr":"","en":"Test the plant's assets under IAS 36.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Provide only for next year's loss, which is more certain than the other two.","es":""},"correct":false,"feedback":{"fr":"","en":"No future loss, even a near one, is provided for.","es":""}},{"id":"D","text":{"fr":"","en":"Do nothing until the losses have materialised.","es":""},"correct":false,"feedback":{"fr":"","en":"The indication of impairment requires action at the reporting date.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000161","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000161","tested_point":"QST.IAS37.000161","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63","IAS 37 §65"],"exercise":{"prompt":{"fr":"","en":"For its printing division, whose losses are expected to continue, Kesmar set up a provision for future losses of 800,000 and performed no impairment test, considering the risk \"already covered\". Which analysis is correct?","es":""},"explanation":{"fr":"","en":"A provision for future operating losses is prohibited (IAS 37, para. 63); on the other hand, the expectation of losses indicates that the division's assets may be impaired and requires a test under IAS 36 (IAS 37, para. 65). Kesmar therefore made two errors.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Only the absence of a test is an error; the provision is justified.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision for future losses is never justified.","es":""}},{"id":"B","text":{"fr":"","en":"Only the provision is an error; no test is needed.","es":""},"correct":false,"feedback":{"fr":"","en":"The expectation of losses requires an impairment test.","es":""}},{"id":"C","text":{"fr":"","en":"The provision must be cancelled and the division's assets tested under IAS 36.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The provision should have been limited to the carrying amount of the division's assets.","es":""},"correct":false,"feedback":{"fr":"","en":"No amount of provision for future losses is allowed.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000162","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.FUTURE_OPERATING_LOSSES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000162","tested_point":"QST.IAS37.000162","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"no-future-losses"},"references":["IAS 37 §63","IAS 37 §64"],"exercise":{"prompt":{"fr":"","en":"A future operating loss meets the definition of a liability as soon as it is included in a budget approved by the board of directors.","es":""},"explanation":{"fr":"","en":"No provision is recognised for future operating losses (IAS 37, para. 63): they meet neither the definition of a liability nor the general recognition criteria (IAS 37, para. 64). Approving a budget creates no obligation towards a third party.","es":""},"common_error":{"fr":"","en":"Treating an internal management decision as an obligation.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000163","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000163","tested_point":"QST.IAS37.000163","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"If an entity has an onerous contract, the present obligation under the contract is recognised and measured as a provision.","es":""},"explanation":{"fr":"","en":"The standard requires the present obligation under an onerous contract to be recognised and measured as a provision (IAS 37, para. 66).","es":""},"common_error":{"fr":"","en":"Waiting for the contract to be performed before recognising the loss.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000164","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000164","tested_point":"QST.IAS37.000164","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68"],"exercise":{"prompt":{"fr":"","en":"When is a contract onerous under IAS 37?","es":""},"explanation":{"fr":"","en":"A contract is onerous when the unavoidable costs of meeting the obligations under it exceed the economic benefits expected to be received under it (IAS 37, para. 68). In practice (reading adopted in this course), the contract is onerous when its cost of fulfilling exceeds the expected benefits; the provision is then the lower of that excess and the exit penalty.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"When its margin is lower than the entity's average margin on its other contracts.","es":""},"correct":false,"feedback":{"fr":"","en":"A low but positive margin does not make the contract onerous.","es":""}},{"id":"B","text":{"fr":"","en":"When the customer pays later than the due dates set in the contract.","es":""},"correct":false,"feedback":{"fr":"","en":"A late payment is a collection issue, not an onerous contract issue.","es":""}},{"id":"C","text":{"fr":"","en":"When its unavoidable costs exceed the expected economic benefits.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"When the entity regrets having signed it.","es":""},"correct":false,"feedback":{"fr":"","en":"Regret is not a criterion: only the quantified comparison counts.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000165","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000013","tested_point":"VG.IAS37.000013","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68"],"exercise":{"prompt":{"fr":"","en":"Lavrel has undertaken to maintain a customer's fleet of forklift trucks until the end of the contract. After the rise in spare-part prices, performing the contract would cost it {cost_of_fulfilling} (cost of fulfilling calculated in accordance with the standard, case data) and bring it {expected_benefits}. The contract allows Lavrel to exit by paying a penalty of {exit_penalty}. Compute the onerous contract provision.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling (360,000) exceeds the expected benefits (210,000): the contract is onerous. The unavoidable costs reflect the least net cost of exiting from the contract (IAS 37, para. 68); under the reading adopted in this course, the net cost of fulfilling, 360,000 − 210,000 = 150,000, is compared with the penalty of 135,000. The penalty is lower: exiting is the least costly route and the provision is 135,000.","es":""},"common_error":{"fr":"","en":"Comparing the penalty with the gross cost of fulfilling: the lower of 360,000 and 135,000, less 210,000, would give a negative amount and no provision.","es":""},"format":"CALCULATION","placeholders":[{"id":"cost_of_fulfilling","value":"360000","unit":"EUR"},{"id":"expected_benefits","value":"210000","unit":"EUR"},{"id":"exit_penalty","value":"135000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Cost of fulfilling the contract","es":""},"value":"360000","unit":"EUR"},{"label":{"fr":"","en":"Economic benefits expected under the contract","es":""},"value":"210000","unit":"EUR"},{"label":{"fr":"","en":"Exit penalty","es":""},"value":"135000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":135000,"tolerance":0,"unit":"EUR"}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000166","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000013","tested_point":"VG.IAS37.000013","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68"],"exercise":{"prompt":{"fr":"","en":"Morlane, an industrial cleaning contractor, remains bound for another {remaining_years} years by a contract to clean a customer's site. After the rise in wages, performing the contract will cost it {annual_cost} a year (cost of fulfilling calculated in accordance with the standard, case data), while the customer pays it {annual_fee} a year. Early termination would cost it compensation of {termination_indemnity}. The effect of discounting is not material. What amount does Morlane provide for?","es":""},"explanation":{"fr":"","en":"Cost of fulfilling: 84,000 × 3 = 252,000; expected benefits: 50,000 × 3 = 150,000. The cost of fulfilling exceeds the benefits: the contract is onerous. The unavoidable costs reflect the least net cost of exiting (IAS 37, para. 68); under the reading adopted in this course, the net cost of fulfilling, 252,000 − 150,000 = 102,000, is compared with the compensation of 180,000. Fulfilling is the least costly route: the provision is 102,000.","es":""},"common_error":{"fr":"","en":"Comparing the compensation with the gross cost of fulfilling: the lower of 252,000 and 180,000, less 150,000, would give 30,000.","es":""},"format":"CALCULATION","placeholders":[{"id":"annual_cost","value":"84000","unit":"EUR"},{"id":"annual_fee","value":"50000","unit":"EUR"},{"id":"remaining_years","value":"3","unit":"YEARS"},{"id":"termination_indemnity","value":"180000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Annual cost of fulfilling","es":""},"value":"84000","unit":"EUR"},{"label":{"fr":"","en":"Annual fee received from the customer","es":""},"value":"50000","unit":"EUR"},{"label":{"fr":"","en":"Remaining years","es":""},"value":"3","unit":"YEARS"},{"label":{"fr":"","en":"Early termination compensation","es":""},"value":"180000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":102000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Onerous contract provision","es":""},"expression":"(a * b) - (c * b)","variables":[{"symbol":"a","meaning":{"fr":"","en":"Annual cost of fulfilling","es":""},"value":84000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Remaining years","es":""},"value":3,"unit":"YEARS"},{"symbol":"c","meaning":{"fr":"","en":"Annual fee received from the customer","es":""},"value":50000,"unit":"EUR"}],"result":102000,"unit":"EUR"}],"references":["REF.IAS37.68"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000167","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000014","tested_point":"VG.IAS37.000014","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"To assess whether a contract to supply moulded parts is onerous, Nivelane lists the costs still to be incurred: direct labour {direct_labour}; direct materials {direct_materials}; share of the depreciation of the press used for this contract and others, using the key chosen by Nivelane (case data), {depreciation_share}; share of head office administrative costs {head_office_costs}. Compute the cost of fulfilling the contract.","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises the costs that relate directly to the contract: incremental costs (direct labour and materials) and an allocation of other costs that relate directly to fulfilling contracts, such as a share of the depreciation of equipment used (IAS 37, para. 68A). Head office costs, not directly related, are excluded: 210,000 + 340,000 + 75,000 = 625,000. The depreciation allocation key is a matter of judgement.","es":""},"common_error":{"fr":"","en":"Limiting the cost of fulfilling to incremental costs (550,000).","es":""},"format":"CALCULATION","placeholders":[{"id":"direct_labour","value":"210000","unit":"EUR"},{"id":"direct_materials","value":"340000","unit":"EUR"},{"id":"depreciation_share","value":"75000","unit":"EUR"},{"id":"head_office_costs","value":"40000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Direct labour","es":""},"value":"210000","unit":"EUR"},{"label":{"fr":"","en":"Direct materials","es":""},"value":"340000","unit":"EUR"},{"label":{"fr":"","en":"Share of the depreciation of the press","es":""},"value":"75000","unit":"EUR"},{"label":{"fr":"","en":"Share of head office administrative costs","es":""},"value":"40000","unit":"EUR"}],"steps":[{"id":"COST_OF_FULFILLING","label":{"fr":"","en":"Cost of fulfilling the contract","es":""},"answer":625000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"COST_OF_FULFILLING","meaning":{"fr":"","en":"Cost of fulfilling the contract","es":""},"expression":"a + b + c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Direct labour","es":""},"value":210000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Direct materials","es":""},"value":340000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Share of the depreciation of the press","es":""},"value":75000,"unit":"EUR"}],"result":625000,"unit":"EUR"}],"rationale":{"fr":"","en":"The cost of fulfilling comprises the costs that relate directly to the contract: incremental costs (direct labour and materials) and an allocation of other costs that relate directly to fulfilling contracts, such as a share of the depreciation of equipment used (IAS 37, para. 68A).","es":""},"references":["REF.IAS37.68A"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000168","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000014","tested_point":"VG.IAS37.000014","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68","IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Orvande must deliver, at a fixed price of {contract_price}, components for which the contract provides no way out. Costs still to be incurred: incremental costs {incremental_costs}; share of the depreciation of the press used {press_depreciation}; share of the depreciation of moulds shared with other contracts {mould_depreciation}; share of general administrative overheads {general_overheads}. The shares result from the keys chosen by Orvande (case data). Compute the cost of fulfilling and the provision (no impairment of the equipment).","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises the incremental costs and an allocation of other directly related costs, such as the depreciation of equipment used (IAS 37, para. 68A); general administrative overheads are excluded: 640,000 + 120,000 + 95,000 = 855,000. This cost exceeds the expected benefits: the contract is onerous. Without an exit clause, there is no penalty to compare: the least net cost of exiting is the net cost of fulfilling, 855,000 − 800,000 = 55,000, the amount of the provision (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""},"common_error":{"fr":"","en":"Concluding that the contract is profitable by using incremental costs only.","es":""},"format":"CALCULATION","placeholders":[{"id":"contract_price","value":"800000","unit":"EUR"},{"id":"incremental_costs","value":"640000","unit":"EUR"},{"id":"press_depreciation","value":"120000","unit":"EUR"},{"id":"mould_depreciation","value":"95000","unit":"EUR"},{"id":"general_overheads","value":"50000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Fixed contract price","es":""},"value":"800000","unit":"EUR"},{"label":{"fr":"","en":"Incremental costs still to be incurred","es":""},"value":"640000","unit":"EUR"},{"label":{"fr":"","en":"Share of the depreciation of the press","es":""},"value":"120000","unit":"EUR"},{"label":{"fr":"","en":"Share of the depreciation of the moulds","es":""},"value":"95000","unit":"EUR"},{"label":{"fr":"","en":"Share of general administrative overheads","es":""},"value":"50000","unit":"EUR"}],"steps":[{"id":"COST_OF_FULFILLING","label":{"fr":"","en":"Cost of fulfilling","es":""},"answer":855000,"tolerance":0,"unit":"EUR"},{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Onerous contract provision","es":""},"answer":55000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"COST_OF_FULFILLING","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"expression":"a + b + c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Incremental costs still to be incurred","es":""},"value":640000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Share of the depreciation of the press","es":""},"value":120000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Share of the depreciation of the moulds","es":""},"value":95000,"unit":"EUR"}],"result":855000,"unit":"EUR"},{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Onerous contract provision","es":""},"expression":"a - b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Cost of fulfilling","es":""},"value":855000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Fixed contract price","es":""},"value":800000,"unit":"EUR"}],"result":55000,"unit":"EUR","rationale":{"fr":"","en":"Without an exit clause, there is no penalty to compare: the least net cost of exiting is the net cost of fulfilling, 855,000 − 800,000 = 55,000, the amount of the provision (IAS 37, paras. 66 and 68; reading adopted in this course).","es":""}}],"references":["REF.IAS37.68","REF.IAS37.68A"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000171","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000171","tested_point":"QST.IAS37.000171","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §67"],"exercise":{"prompt":{"fr":"","en":"A purchase order that Rézal can cancel without paying compensation creates no obligation, even if the price terms have become unfavourable to it.","es":""},"explanation":{"fr":"","en":"Many contracts, such as some routine purchase orders, can be cancelled without paying compensation: there is then no obligation (IAS 37, para. 67). Only contracts that create rights and obligations for each party can become onerous within the meaning of the standard.","es":""},"common_error":{"fr":"","en":"Providing for the loss on an order that can be cancelled at no cost.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000172","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS","IAS37.SCOPE.GENERAL"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000172","tested_point":"QST.IAS37.000172","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000001","section_id":"scope-general"},"references":["IAS 37 §67","IAS 37 §3"],"exercise":{"prompt":{"fr":"","en":"Salvère has firmly committed to buy paper in 20X6; neither party has yet performed its obligations. The paper will be processed and resold at a positive margin. What is the treatment of the contract under IAS 37?","es":""},"explanation":{"fr":"","en":"A contract under which neither party has performed its obligations is an executory contract (IAS 37, para. 3); executory contracts that are not onerous remain outside the scope of the standard (IAS 37, para. 67). No provision is recognised.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for the whole firm purchase commitment for 20X6.","es":""},"correct":false,"feedback":{"fr":"","en":"A profitable purchase commitment is not a provision.","es":""}},{"id":"B","text":{"fr":"","en":"No treatment: an executory contract that is not onerous, outside the scope.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Disclosure of a contingent liability for the purchase commitment.","es":""},"correct":false,"feedback":{"fr":"","en":"The contract is outside the scope: it is not an IAS 37 contingent liability.","es":""}},{"id":"D","text":{"fr":"","en":"A provision equal to the margin expected on reselling the paper.","es":""},"correct":false,"feedback":{"fr":"","en":"An expected margin is never provided for.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000173","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000173","tested_point":"QST.IAS37.000173","difficulty":"ADVANCED","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Which of these costs of Tilvane are included in the cost of fulfilling a manufacturing contract?","es":""},"explanation":{"fr":"","en":"The cost of fulfilling comprises the incremental costs of fulfilling the contract, such as direct labour and materials, and an allocation of other costs that relate directly to fulfilling contracts, such as a share of the depreciation of equipment used for this contract and others (IAS 37, para. 68A). General administrative overheads and sales prospecting costs do not relate directly to fulfilment.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Group senior management costs.","es":""},"correct":false,"feedback":{"fr":"","en":"Overheads that do not relate directly to fulfilment are excluded.","es":""}},{"id":"B","text":{"fr":"","en":"Direct labour assigned to the contract.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Direct materials consumed.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Costs of prospecting for new customers.","es":""},"correct":false,"feedback":{"fr":"","en":"Sales prospecting does not serve to fulfil the contract.","es":""}},{"id":"E","text":{"fr":"","en":"A share of the depreciation of the line used for this contract and others.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000174","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000174","tested_point":"QST.IAS37.000174","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68A"],"exercise":{"prompt":{"fr":"","en":"Urbanel Méca concluded that a contract priced at 500,000 is not onerous: its incremental costs still to be incurred are 470,000. It did not take into account the share, determined using its allocation key (case data), of 60,000 of depreciation of the equipment used for this contract and others. What is the error?","es":""},"explanation":{"fr":"","en":"The cost of fulfilling includes, in addition to incremental costs, an allocation of other costs that relate directly to fulfilment, such as a share of the depreciation of equipment used (IAS 37, para. 68A): 470,000 + 60,000 = 530,000, which exceeds the price of 500,000. The contract is onerous.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The contract price should have been discounted before the comparison.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting is not at issue in this error.","es":""}},{"id":"B","text":{"fr":"","en":"Only the costs already incurred should have been compared with the price.","es":""},"correct":false,"feedback":{"fr":"","en":"What counts is the costs still to be incurred to fulfil the contract.","es":""}},{"id":"C","text":{"fr":"","en":"The depreciation share should have been deducted from the incremental costs.","es":""},"correct":false,"feedback":{"fr":"","en":"The depreciation share is added to the incremental costs, not deducted from them.","es":""}},{"id":"D","text":{"fr":"","en":"The cost of fulfilling should have included the depreciation share: the contract is onerous.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000175","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000175","tested_point":"QST.IAS37.000175","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §69"],"exercise":{"prompt":{"fr":"","en":"For an onerous contract fulfilled using a dedicated packaging line, Valmondis recognised a provision for the whole expected loss without examining the value of the line, whose carrying amount nevertheless exceeds its recoverable amount. What is the error?","es":""},"explanation":{"fr":"","en":"Before a separate provision for an onerous contract is established, the entity recognises any impairment loss that has occurred on assets used in fulfilling the contract (IAS 37, para. 69). Valmondis had to impair the line first and then provide for the balance, to avoid counting the loss twice.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The impairment loss on the line had to be recognised before the provision.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The provision should have been discounted over the remaining useful life of the packaging line.","es":""},"correct":false,"feedback":{"fr":"","en":"Discounting does not resolve the question of the order of treatments.","es":""}},{"id":"C","text":{"fr":"","en":"No provision is possible when a dedicated asset is used.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision remains possible for the balance after impairment.","es":""}},{"id":"D","text":{"fr":"","en":"The line should have been reclassified as inventory.","es":""},"correct":false,"feedback":{"fr":"","en":"There is no basis for reclassification as inventory here.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000176","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000176","tested_point":"QST.IAS37.000176","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §66","IAS 37 §68"],"exercise":{"prompt":{"fr":"","en":"In 20X6, Wavrelle must deliver parts at a total fixed price of 1,020,000; the contract contains no exit clause. The remaining cost of fulfilling, computed in accordance with the standard, is 1,150,000. No asset is used exclusively for this contract. What does Wavrelle conclude at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"The cost of fulfilling, 1,150,000, exceeds the expected benefits of 1,020,000: the contract is onerous (IAS 37, para. 68). With no way out, there is no penalty to compare: the least net cost of exiting is the net cost of fulfilling, 1,150,000 − 1,020,000 = 130,000 (reading adopted in this course). The present obligation is recognised as a provision of 130,000 (IAS 37, para. 66).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No provision: the loss will be recognised as deliveries are made in 20X6.","es":""},"correct":false,"feedback":{"fr":"","en":"The expected loss on an onerous contract is provided for as soon as the contract becomes onerous.","es":""}},{"id":"B","text":{"fr":"","en":"Disclosure in the notes, the loss being a future one.","es":""},"correct":false,"feedback":{"fr":"","en":"The contract creates a present obligation: mere disclosure is not enough.","es":""}},{"id":"C","text":{"fr":"","en":"The contract is onerous: a provision is recognised.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"A provision of 1,150,000 for the total cost of fulfilling the contract.","es":""},"correct":false,"feedback":{"fr":"","en":"The provision covers the excess of unavoidable costs over benefits, not the total cost.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000177","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000177","tested_point":"QST.IAS37.000177","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §69","IAS 37 §66"],"exercise":{"prompt":{"fr":"","en":"Xantela is fulfilling a waste treatment contract that has become onerous using an incinerator that it also uses for other customers. Management control proposes three approaches. Which one complies with the standard?","es":""},"explanation":{"fr":"","en":"Before a separate provision for an onerous contract is established, the entity recognises any impairment loss that has occurred on assets used in fulfilling the contract (IAS 37, para. 69), including an asset also used for other contracts; the remaining obligation is then provided for (IAS 37, para. 66). The incinerator is tested under IAS 36, and the scope of the test involves judgement.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Provide for the total loss on the contract, then test the incinerator next year.","es":""},"correct":false,"feedback":{"fr":"","en":"The order is reversed: the impairment of the assets used comes first.","es":""}},{"id":"B","text":{"fr":"","en":"First test the incinerator under IAS 36, recognise any impairment loss, then provide for the balance.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Provide nothing, as the incinerator is also used for other, profitable customers.","es":""},"correct":false,"feedback":{"fr":"","en":"Sharing the asset does not exempt from either the test or the provision.","es":""}},{"id":"D","text":{"fr":"","en":"Impair the incinerator by the total loss on the contract, without a provision.","es":""},"correct":false,"feedback":{"fr":"","en":"The impairment loss is measured under IAS 36, not by the loss on the contract.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000179","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.ONEROUS_CONTRACTS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000179","tested_point":"QST.IAS37.000179","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000010","section_id":"onerous-rule"},"references":["IAS 37 §68"],"exercise":{"prompt":{"fr":"","en":"The unavoidable costs of a contract are always equal to its cost of fulfilling.","es":""},"explanation":{"fr":"","en":"The unavoidable costs reflect the least net cost of exiting from the contract (IAS 37, para. 68). Under the reading adopted in this course, this least net cost is the lower of the net cost of fulfilling (cost of fulfilling − expected benefits) and any compensation or penalties arising from failure to fulfil it. A penalty lower than the net cost of fulfilling becomes the reference: for example, cost of fulfilling 500, benefits 420, penalty 60 → provision 60.","es":""},"common_error":{"fr":"","en":"Ignoring an exit clause that costs less than the net cost of fulfilling.","es":""},"format":"TRUE_FALSE","answer":false},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000180","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000180","tested_point":"QST.IAS37.000180","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37 §70"],"exercise":{"prompt":{"fr":"","en":"Which of these projects of Aubrelle Logistique may constitute a restructuring as defined in IAS 37?","es":""},"explanation":{"fr":"","en":"Events that may fall under the definition of restructuring include: the sale or termination of a line of business; the closure of business locations in a country or region, or the relocation of business activities from one country or region to another; changes in management structure, for example eliminating a layer of management; and fundamental reorganisations that have a material effect on the nature and focus of operations (IAS 37, para. 70).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The routine replacement of a worn forklift truck.","es":""},"correct":false,"feedback":{"fr":"","en":"A routine replacement changes neither the scope nor the conduct of the business.","es":""}},{"id":"B","text":{"fr":"","en":"The permanent termination of the refrigerated transport business.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The elimination of the regional director layer.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The annual review of staff salaries.","es":""},"correct":false,"feedback":{"fr":"","en":"A salary review is part of routine management.","es":""}},{"id":"E","text":{"fr":"","en":"The relocation of all the hubs in one country to a neighbouring country.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000181","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000181","tested_point":"QST.IAS37.000181","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37 §70"],"exercise":{"prompt":{"fr":"","en":"The relocation of business activities from one country to another is among the events that may constitute a restructuring.","es":""},"explanation":{"fr":"","en":"Among the events that may constitute a restructuring, the standard cites the closure of business locations in a country or region and the relocation of business activities from one country or region to another (IAS 37, para. 70).","es":""},"common_error":{"fr":"","en":"Limiting the notion of restructuring to disposals only.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000182","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION","IAS37.DEFINITIONS.KEY_TERMS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000182","tested_point":"QST.IAS37.000182","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000002","section_id":"liability-and-provision"},"references":["IAS 37 §10","IAS 37 §70"],"exercise":{"prompt":{"fr":"","en":"Which definition corresponds to a restructuring under IAS 37?","es":""},"explanation":{"fr":"","en":"A restructuring is a programme that is planned and controlled by management and materially changes either the scope of a business undertaken by the entity or the manner in which that business is conducted (IAS 37, para. 10); the standard gives examples, such as the closure of locations or the elimination of a management layer (IAS 37, para. 70).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Any decision to cut next year's costs, whatever its scale.","es":""},"correct":false,"feedback":{"fr":"","en":"A mere cost reduction is not enough if the scope or conduct of the business does not change significantly.","es":""}},{"id":"B","text":{"fr":"","en":"Any operation imposed by a third party, such as a court decision.","es":""},"correct":false,"feedback":{"fr":"","en":"A restructuring is a programme planned and controlled by management.","es":""}},{"id":"C","text":{"fr":"","en":"A programme planned and controlled by management that significantly changes the scope or the conduct of a business.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Any change of accounting software decided by the finance department.","es":""},"correct":false,"feedback":{"fr":"","en":"A change of internal tool is not in itself a restructuring.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000183","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000183","tested_point":"QST.IAS37.000183","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37 §71"],"exercise":{"prompt":{"fr":"","en":"A restructuring provision is recognised only when the general recognition criteria for provisions are met.","es":""},"explanation":{"fr":"","en":"A restructuring provision is recognised only when the general recognition criteria for provisions are met; the standard then specifies how they apply to restructurings (IAS 37, para. 71).","es":""},"common_error":{"fr":"","en":"Providing for a restructuring as soon as it is decided, with no present obligation.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000184","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000184","tested_point":"QST.IAS37.000184","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"What are the two conditions for a constructive obligation to restructure?","es":""},"explanation":{"fr":"","en":"A constructive obligation to restructure arises only when the entity has a detailed formal plan and has raised a valid expectation in those affected that it will carry out the restructuring, by starting to implement the plan or announcing its main features to them (IAS 37, para. 72).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A formal plan and the written agreement of each employee concerned.","es":""},"correct":false,"feedback":{"fr":"","en":"The individual agreement of employees is not required.","es":""}},{"id":"B","text":{"fr":"","en":"A detailed formal plan, and a valid expectation in those affected.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A board decision and an approved budget for the following year.","es":""},"correct":false,"feedback":{"fr":"","en":"An internal decision and a budget do not create an expectation in those affected.","es":""}},{"id":"D","text":{"fr":"","en":"A press announcement and the setting up of a reserve.","es":""},"correct":false,"feedback":{"fr":"","en":"A reserve plays no role; an announcement must also be sufficiently specific.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000185","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000185","tested_point":"QST.IAS37.000185","difficulty":"ADVANCED","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"What must Belcorvane's detailed formal restructuring plan identify, at a minimum?","es":""},"explanation":{"fr":"","en":"The plan must identify at least the business or part of the business concerned, the principal locations affected, the location, function and approximate number of employees who will be compensated, the expenditures that will be undertaken and when the plan will be implemented (IAS 37, para. 72). A list of employees by name and the expected disposal gain are not required.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The principal locations affected.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The name of each employee concerned.","es":""},"correct":false,"feedback":{"fr":"","en":"The plan refers to an approximate number and to functions, not to a list of names.","es":""}},{"id":"C","text":{"fr":"","en":"The location, function and approximate number of employees to be compensated.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The expenditures to be undertaken and the implementation date.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"The gain expected on selling the assets of the site.","es":""},"correct":false,"feedback":{"fr":"","en":"Disposal gains are not part of the required plan and are excluded from the provision.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000186","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000186","tested_point":"QST.IAS37.000186","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37 §73"],"exercise":{"prompt":{"fr":"","en":"A public announcement of the main features of a restructuring plan creates a constructive obligation only if it is made in such a way and in sufficient detail as to give rise to valid expectations.","es":""},"explanation":{"fr":"","en":"A public announcement of the main features of the plan shows that implementation has started, but it creates a constructive obligation only if it is made in such a way and in sufficient detail as to give rise to valid expectations (IAS 37, para. 73).","es":""},"common_error":{"fr":"","en":"Treating a general statement of intent as an obligating event.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000187","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","context":"V1_VG.IAS37.000016","tested_point":"VG.IAS37.000016","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37","IAS 37 §73"],"exercise":{"prompt":{"fr":"","en":"In November 20X5, the board of Casselane adopts a detailed plan to close its foundry unit (site, approximate headcount by function, costs, six-month timetable). In December, dismantling of the furnaces begins and equipment is sold. Is there a constructive obligation at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"A constructive obligation requires a detailed formal plan and a valid expectation raised in those affected, in particular by starting to implement the plan (IAS 37, para. 72). Dismantling a plant or selling assets shows that implementation has started (IAS 37, para. 73): the obligation exists at the reporting date.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No, because the closure has not yet been announced to the public.","es":""},"correct":false,"feedback":{"fr":"","en":"Starting implementation can be enough to create the valid expectation, without a public announcement.","es":""}},{"id":"B","text":{"fr":"","en":"Yes: a detailed plan and the start of implementation before the reporting date.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"No, until all employees have been made redundant.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation arises before the restructuring is completed.","es":""}},{"id":"D","text":{"fr":"","en":"Yes, but only for the furnaces already dismantled.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation covers the restructuring under way, not only the operations already carried out.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000188","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","context":"V1_VG.IAS37.000016","tested_point":"VG.IAS37.000016","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37","IAS 37 §73"],"exercise":{"prompt":{"fr":"","en":"On 2 December 20X5, the regional bank Dauvrane approves a detailed plan to close 18 rural branches (list of branches, about 90 jobs by function, costs, timetable in the first half of 20X6). On 15 December, it gives the plan to the employee representatives and informs each customer concerned by letter of the closure dates. Is there a constructive obligation at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"A constructive obligation requires a detailed formal plan and a valid expectation raised in those affected, for example by announcing the main features of the plan (IAS 37, para. 72). An announcement made in such a way and in sufficient detail, here to the employee representatives and to customers, raises that expectation (IAS 37, para. 73).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No, as no closure work has begun.","es":""},"correct":false,"feedback":{"fr":"","en":"A sufficiently specific announcement can be enough, even without any work having started.","es":""}},{"id":"B","text":{"fr":"","en":"No, because the announcement was not published in the press.","es":""},"correct":false,"feedback":{"fr":"","en":"It is those affected who must be informed; the press is not required.","es":""}},{"id":"C","text":{"fr":"","en":"Yes: a detailed plan and a specific announcement to those affected before the reporting date.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Yes, but only for the branches closing in January.","es":""},"correct":false,"feedback":{"fr":"","en":"The obligation covers the whole plan announced.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000189","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000189","tested_point":"QST.IAS37.000189","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 15 December 20X5, the board of Elbevane decides to close a plant; the detailed plan is announced to employees and customers only on 10 January 20X6, and nothing was started before the reporting date. The restructuring is material. What is the treatment at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"A decision taken before the reporting date does not give rise to a constructive obligation at that date unless, before then, the entity has started to implement the plan or announced its main features to those affected; if these events occur after the reporting date, disclosure is required under IAS 10 when the restructuring is material (IAS 37, para. 75).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision, as the board's decision predates the reporting date.","es":""},"correct":false,"feedback":{"fr":"","en":"The decision alone does not create a constructive obligation at the reporting date.","es":""}},{"id":"B","text":{"fr":"","en":"No provision; disclosure under IAS 10.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"A provision reduced by half because of the late announcement.","es":""},"correct":false,"feedback":{"fr":"","en":"No partial provision is provided for.","es":""}},{"id":"D","text":{"fr":"","en":"Neither a provision nor disclosure, as the announcement was later.","es":""},"correct":false,"feedback":{"fr":"","en":"A material restructuring announced after the reporting date calls for disclosure.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000190","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000190","tested_point":"QST.IAS37.000190","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 30 December 20X5, the management of Fresnelle approves a plan to cut head office staff by 15%. The plan remains confidential until its announcement planned for March 20X6 and no measure has been started. The accountant recognises a restructuring provision of 1,100,000 at 31 December 20X5. What is the error?","es":""},"explanation":{"fr":"","en":"A decision to restructure taken before the reporting date does not create a constructive obligation at that date if, before then, the entity has neither started to implement the plan nor announced its main features to those affected (IAS 37, para. 75). The confidential plan raises no valid expectation: the provision must be cancelled.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The amount should have been discounted, as departures are spread over the whole of 20X6.","es":""},"correct":false,"feedback":{"fr":"","en":"The amount is not at issue in the absence of an obligation.","es":""}},{"id":"B","text":{"fr":"","en":"The provision should have been presented as an employee-related payable.","es":""},"correct":false,"feedback":{"fr":"","en":"Classification is not at issue: the existence of the liability is.","es":""}},{"id":"C","text":{"fr":"","en":"No obligation exists at the reporting date: the plan was neither started nor announced.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Only half of the amount should have been provided for.","es":""},"correct":false,"feedback":{"fr":"","en":"No provision, even partial, is justified.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000191","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000191","tested_point":"QST.IAS37.000191","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"On 20 January 20X6, before the 20X5 financial statements were authorised, Gervalis announced the material closure of its packaging division, decided in January. It recognised no provision at 31 December 20X5, rightly, but its 20X5 notes say nothing about this restructuring. What is the error?","es":""},"explanation":{"fr":"","en":"When the implementation or announcement of a restructuring occurs after the reporting date, disclosure is required under IAS 10 if the restructuring is material and its non-disclosure could influence the decisions of users (IAS 37, para. 75). The absence of a provision is correct, but the disclosure is missing.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision should have been recognised at 31 December 20X5.","es":""},"correct":false,"feedback":{"fr":"","en":"As the announcement was after the reporting date, no provision is due in 20X5.","es":""}},{"id":"B","text":{"fr":"","en":"The IAS 10 disclosure about this material restructuring was omitted.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The restructuring should have been restated in the 20X4 comparatives presented with the statements.","es":""},"correct":false,"feedback":{"fr":"","en":"No restatement of comparatives is at issue.","es":""}},{"id":"D","text":{"fr":"","en":"Half of the closure should have been provided for in 20X5.","es":""},"correct":false,"feedback":{"fr":"","en":"No partial provision is justified in 20X5.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000192","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000192","tested_point":"QST.IAS37.000192","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"No obligation arises for the sale of an operation until the entity is committed to the sale, that is, until there is a binding sale agreement.","es":""},"explanation":{"fr":"","en":"No obligation arises for the sale of an operation until the entity is committed to the sale, i.e. until there is a binding sale agreement (IAS 37, para. 78).","es":""},"common_error":{"fr":"","en":"Providing for the costs of a sale with no committed buyer.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000193","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000193","tested_point":"QST.IAS37.000193","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"In October 20X5, Hautrivane publicly announces its decision to sell its gardening line of business. At 31 December, there are contacts with two potential buyers, but no agreement has been signed. The sale is the whole restructuring. What does Hautrivane conclude?","es":""},"explanation":{"fr":"","en":"Even when decided and publicly announced, the sale commits the entity only once a purchaser has been identified and a binding agreement concluded (IAS 37, para. 78; IAS 37, para. 79): no obligation exists at 31 December. The assets of the line of business are tested for impairment under IAS 36 (IAS 37, para. 79).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A provision for the costs of the sale, as the public announcement creates the obligation.","es":""},"correct":false,"feedback":{"fr":"","en":"An announcement is not enough for a sale: a binding agreement is required.","es":""}},{"id":"B","text":{"fr":"","en":"A provision limited to the costs of the negotiations in progress.","es":""},"correct":false,"feedback":{"fr":"","en":"No binding agreement exists: nothing is to be provided for in respect of the sale.","es":""}},{"id":"C","text":{"fr":"","en":"No obligation at the reporting date; impairment test of the assets of the business under IAS 36.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"No obligation and no other analysis until signature.","es":""},"correct":false,"feedback":{"fr":"","en":"The prospect of a sale requires the assets of the business to be tested under IAS 36.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000194","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000194","tested_point":"QST.IAS37.000194","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Isinvale is restructuring its textile business: closure of two workshops (detailed plan announced to employees in November 20X5) and sale of a third workshop, for which no binding agreement has been signed at 31 December. What is the treatment at 31 December 20X5?","es":""},"explanation":{"fr":"","en":"When the sale is only part of the restructuring, a constructive obligation can arise for the other parts before a binding sale agreement exists; the sale itself commits the entity only once a binding agreement has been concluded, and the assets concerned are tested for impairment under IAS 36 (IAS 37, para. 79).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"No obligation for the whole, as long as the sale has not been signed.","es":""},"correct":false,"feedback":{"fr":"","en":"The absence of a sale agreement does not prevent an obligation for the other parts.","es":""}},{"id":"B","text":{"fr":"","en":"An obligation for the whole business, including the sale, from the November announcement.","es":""},"correct":false,"feedback":{"fr":"","en":"The sale commits the entity only when a binding agreement is signed.","es":""}},{"id":"C","text":{"fr":"","en":"An obligation for the sale alone, since it is the most advanced.","es":""},"correct":false,"feedback":{"fr":"","en":"It is the other way round: the sale is the part that does not yet commit the entity.","es":""}},{"id":"D","text":{"fr":"","en":"An obligation for the announced closures; none for the unsigned sale.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000195","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000195","tested_point":"QST.IAS37.000195","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"In December 20X5, Jarvenne announces to employees a closure plan that will begin only in 20X8 and run over five years. What effect does this timetable have on whether a constructive obligation exists?","es":""},"explanation":{"fr":"","en":"For a communicated plan to give rise to a constructive obligation, implementation must be planned to begin as soon as possible and be completed in a timeframe that makes significant changes unlikely; a long delay before the start or an unreasonably long duration makes a valid expectation unlikely, as the entity can still change its plans (IAS 37, para. 74).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"None: the announcement is enough, whatever the timetable.","es":""},"correct":false,"feedback":{"fr":"","en":"The timetable is part of assessing the valid expectation.","es":""}},{"id":"B","text":{"fr":"","en":"The long delay makes a valid expectation unlikely.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The timetable affects only the discounting of the provision.","es":""},"correct":false,"feedback":{"fr":"","en":"Before discounting, the very existence of the obligation is at issue.","es":""}},{"id":"D","text":{"fr":"","en":"The delay strengthens the obligation, as employees have more time to prepare.","es":""},"correct":false,"feedback":{"fr":"","en":"A long delay, on the contrary, weakens the valid expectation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000196","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_RECOGNITION"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000196","tested_point":"QST.IAS37.000196","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"what-is-restructuring"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Even if a management decision is not enough on its own to create a constructive obligation, an obligation may result from earlier events together with that decision.","es":""},"explanation":{"fr":"","en":"Where a management decision does not on its own create a constructive obligation, an obligation may result from other earlier events together with that decision (IAS 37, para. 76); the analysis therefore covers all the facts.","es":""},"common_error":{"fr":"","en":"Analysing management's decision without regard to earlier events.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000199","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000199","tested_point":"QST.IAS37.000199","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37 §80"],"exercise":{"prompt":{"fr":"","en":"Which expenditures may a restructuring provision include?","es":""},"explanation":{"fr":"","en":"A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity (IAS 37, para. 80).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"All expenditures incurred during the restructuring period, whatever their nature.","es":""},"correct":false,"feedback":{"fr":"","en":"Expenditures associated with ongoing activities are excluded.","es":""}},{"id":"B","text":{"fr":"","en":"Severance payments only, excluding any other direct expenditure.","es":""},"correct":false,"feedback":{"fr":"","en":"Other direct expenditures, such as termination penalties, may be included.","es":""}},{"id":"C","text":{"fr":"","en":"All expenditures decided by the board at the same time as the restructuring.","es":""},"correct":false,"feedback":{"fr":"","en":"The board's decision does not determine whether expenditures are eligible.","es":""}},{"id":"D","text":{"fr":"","en":"Direct expenditures, necessarily entailed and not associated with ongoing activities.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000200","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000200","tested_point":"QST.IAS37.000200","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Moncelis is closing a warehouse as part of a restructuring. Which expenditures must be excluded from the provision?","es":""},"explanation":{"fr":"","en":"The provision excludes, in particular, retraining or relocating continuing staff, marketing, and investment in new systems and distribution networks: these expenditures relate to the future conduct of the business (IAS 37, para. 81). The compensation of employees made redundant at the closed warehouse is, by contrast, a direct expenditure.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Severance payments for the employees of the closed warehouse.","es":""},"correct":false,"feedback":{"fr":"","en":"A direct expenditure: it is necessarily entailed by the closure and not associated with ongoing activities.","es":""}},{"id":"B","text":{"fr":"","en":"Training continuing staff on the new tools.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The advertising campaign announcing the new network.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The new management system for the remaining warehouses.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"Termination penalties on the maintenance contracts of the closed warehouse.","es":""},"correct":false,"feedback":{"fr":"","en":"These penalties result from the closure and do not relate to ongoing activities.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000201","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000017","tested_point":"VG.IAS37.000017","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Névillane has a constructive obligation to restructure at 31 December 20X5 (closure of its Bellerivane site). Estimated costs: compensation of employees made redundant {severance}; termination penalties on the supply contracts of the closed site {supply_penalties}; removal of equipment from the closed site {equipment_removal}; training of continuing staff {retraining}; communication campaign on the new organisation {marketing}; new IT system for the remaining sites {new_it_system}. Compute the provision.","es":""},"explanation":{"fr":"","en":"The provision includes only direct expenditures, necessarily entailed by the restructuring and not associated with ongoing activities (IAS 37, para. 80); training continuing staff, marketing and new systems are excluded (IAS 37, para. 81). Provision: 1,450,000 + 180,000 + 220,000 = 1,850,000.","es":""},"common_error":{"fr":"","en":"Including training, communication and the IT system (2,305,000).","es":""},"format":"CALCULATION","placeholders":[{"id":"severance","value":"1450000","unit":"EUR"},{"id":"supply_penalties","value":"180000","unit":"EUR"},{"id":"equipment_removal","value":"220000","unit":"EUR"},{"id":"retraining","value":"95000","unit":"EUR"},{"id":"marketing","value":"60000","unit":"EUR"},{"id":"new_it_system","value":"300000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Compensation of employees made redundant","es":""},"value":"1450000","unit":"EUR"},{"label":{"fr":"","en":"Termination penalties","es":""},"value":"180000","unit":"EUR"},{"label":{"fr":"","en":"Removal of equipment from the closed site","es":""},"value":"220000","unit":"EUR"},{"label":{"fr":"","en":"Training of continuing staff","es":""},"value":"95000","unit":"EUR"},{"label":{"fr":"","en":"Communication campaign","es":""},"value":"60000","unit":"EUR"},{"label":{"fr":"","en":"New IT system","es":""},"value":"300000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Restructuring provision","es":""},"answer":1850000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Restructuring provision","es":""},"expression":"a + b + c","variables":[{"symbol":"a","meaning":{"fr":"","en":"Compensation of employees made redundant","es":""},"value":1450000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Termination penalties","es":""},"value":180000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Removal of equipment from the closed site","es":""},"value":220000,"unit":"EUR"}],"result":1850000,"unit":"EUR"}],"references":["REF.IAS37.80","REF.IAS37.81"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000202","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000017","tested_point":"VG.IAS37.000017","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37 §80","IAS 37"],"exercise":{"prompt":{"fr":"","en":"The Ondavelle group is consolidating its logistics activities and closing three warehouses; the constructive obligation exists at the reporting date. Data: severance payments {severance_pay}; warehouse closure costs {warehouse_closure}; operating losses expected from the warehouses until closure {operating_losses} (no onerous contract); gain expected on the sale of a warehouse {expected_gain}; relocation of continuing staff to the new site {staff_relocation}. What amount should be provided for?","es":""},"explanation":{"fr":"","en":"Only direct expenditures are included (IAS 37, para. 80); relocating continuing staff is excluded (IAS 37, para. 81), as are operating losses up to the date of the restructuring unless they relate to an onerous contract (IAS 37, para. 82); the expected disposal gain is not deducted (IAS 37, para. 83). Provision: 2,760,000 + 410,000 = 3,170,000.","es":""},"common_error":{"fr":"","en":"Deducting the disposal gain (2,270,000).","es":""},"format":"CALCULATION","placeholders":[{"id":"severance_pay","value":"2760000","unit":"EUR"},{"id":"warehouse_closure","value":"410000","unit":"EUR"},{"id":"operating_losses","value":"530000","unit":"EUR"},{"id":"expected_gain","value":"900000","unit":"EUR"},{"id":"staff_relocation","value":"140000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Severance payments","es":""},"value":"2760000","unit":"EUR"},{"label":{"fr":"","en":"Warehouse closure costs","es":""},"value":"410000","unit":"EUR"},{"label":{"fr":"","en":"Operating losses until closure","es":""},"value":"530000","unit":"EUR"},{"label":{"fr":"","en":"Gain expected on the sale","es":""},"value":"900000","unit":"EUR"},{"label":{"fr":"","en":"Relocation of continuing staff","es":""},"value":"140000","unit":"EUR"}],"steps":[{"id":"PROVISION_AMOUNT","label":{"fr":"","en":"Restructuring provision","es":""},"answer":3170000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"PROVISION_AMOUNT","meaning":{"fr":"","en":"Restructuring provision","es":""},"expression":"a + b","variables":[{"symbol":"a","meaning":{"fr":"","en":"Severance payments","es":""},"value":2760000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Warehouse closure costs","es":""},"value":410000,"unit":"EUR"}],"result":3170000,"unit":"EUR"}],"references":["REF.IAS37.80","REF.IAS37.81","REF.IAS37.82","REF.IAS37.83"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000205","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000205","tested_point":"QST.IAS37.000205","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Rochemaurel is closing its Valbrenne site; the direct restructuring expenditures amount to 1,600,000. It expects to sell the site at a gain of 700,000 and has recognised a net provision of 900,000. What is the error?","es":""},"explanation":{"fr":"","en":"Gains on the expected disposal of assets are not taken into account in measuring a restructuring provision, even if the sale is part of the restructuring (IAS 37, para. 83). The provision must be 1,600,000; the gain will be recognised on disposal.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The provision should have been presented as a deduction from the value of the site.","es":""},"correct":false,"feedback":{"fr":"","en":"A provision is a liability; it is not presented as a deduction from an asset.","es":""}},{"id":"B","text":{"fr":"","en":"The expected disposal gain must not be deducted: the provision is 1,600,000.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"The provision should have been 2,300,000, including the gain.","es":""},"correct":false,"feedback":{"fr":"","en":"The gain is not added to the provision.","es":""}},{"id":"D","text":{"fr":"","en":"No provision is due, since the sale produces a gain.","es":""},"correct":false,"feedback":{"fr":"","en":"The future gain does not remove the present obligation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000206","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"ANALYSIS","context":"V1_QST.IAS37.000206","tested_point":"QST.IAS37.000206","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":120,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Saulnivel's restructuring provision includes 820,000 of direct expenditures and 260,000 of identifiable operating losses up to the closure date of the site, unrelated to any onerous contract. What is the error?","es":""},"explanation":{"fr":"","en":"Identifiable future operating losses up to the date of a restructuring are not included in the provision, unless they relate to an onerous contract (IAS 37, para. 82). The provision must be limited to 820,000.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Operating losses up to the closure must be excluded: a provision of 820,000.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The direct expenditures should have been excluded from the provision.","es":""},"correct":false,"feedback":{"fr":"","en":"Direct expenditures are precisely what the provision comprises.","es":""}},{"id":"C","text":{"fr":"","en":"The provision should have been presented as a deduction from the site's assets.","es":""},"correct":false,"feedback":{"fr":"","en":"Classification is not at issue.","es":""}},{"id":"D","text":{"fr":"","en":"The losses should have been counted twice, for two periods.","es":""},"correct":false,"feedback":{"fr":"","en":"Nothing supports such a calculation.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000207","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000207","tested_point":"QST.IAS37.000207","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"As part of closing its plant, Tavernelle identifies two losses expected up to the closure date: (1) the general operating loss of the plant; (2) the loss on a fixed-price delivery contract that has become onerous and must be performed until the last day. Which can be included in provisions at the reporting date?","es":""},"explanation":{"fr":"","en":"Identifiable future operating losses up to the date of a restructuring are not included in the provision, unless they relate to an onerous contract (IAS 37, para. 82). Only the loss on the onerous contract may be provided for, under the rules for onerous contracts.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Both losses, as they are linked to the same closure.","es":""},"correct":false,"feedback":{"fr":"","en":"The general operating loss is excluded.","es":""}},{"id":"B","text":{"fr":"","en":"Neither, as every future loss is excluded.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard makes an exception for onerous contracts.","es":""}},{"id":"C","text":{"fr":"","en":"Only the loss on the onerous contract.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Only the general operating loss.","es":""},"correct":false,"feedback":{"fr":"","en":"It is the other way round: the general loss is excluded.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000208","standard_id":"IAS37","concept_ids":["IAS37.APPLICATION.RESTRUCTURING_MEASUREMENT"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000208","tested_point":"QST.IAS37.000208","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000011","section_id":"eligible-costs"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Usselane is merging two head offices into one. Continuing staff will be relocated to the new head office, at a moving and installation cost of 310,000. Is this cost included in the restructuring provision?","es":""},"explanation":{"fr":"","en":"The provision excludes relocating continuing staff: this expenditure relates to the future conduct of the business and is recognised on the same basis as if it arose independently of the restructuring (IAS 37, para. 81).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, because the relocation is decided as part of the restructuring.","es":""},"correct":false,"feedback":{"fr":"","en":"A link with the restructuring is not enough: the expenditure relates to the ongoing business.","es":""}},{"id":"B","text":{"fr":"","en":"No: relocating continuing staff relates to the future conduct of the business.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Yes, for half, as both head offices are concerned.","es":""},"correct":false,"feedback":{"fr":"","en":"No partial inclusion is provided for.","es":""}},{"id":"D","text":{"fr":"","en":"Yes, if the cost is reliably estimated.","es":""},"correct":false,"feedback":{"fr":"","en":"A reliable estimate does not make the expenditure eligible.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000209","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000209","tested_point":"QST.IAS37.000209","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"For the reconciliation of each class of provision, comparative information for the previous period is not required.","es":""},"explanation":{"fr":"","en":"For each class of provision, the entity presents the reconciliation between opening and closing carrying amounts (additions, amounts used, amounts reversed, unwinding and the effect of changes in the discount rate); comparative information is not required (IAS 37, para. 84).","es":""},"common_error":{"fr":"","en":"Believing that the exemption from comparatives applies to all information on provisions.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000210","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000019","tested_point":"VG.IAS37.000019","difficulty":"INTERMEDIATE","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"Valréane's \"site restoration\" class shows: opening provision {opening}; provisions made {additions}; amounts used {used}; unused amounts reversed {reversed}; increase due to the passage of time {unwinding}. Compute the closing provision in the reconciliation.","es":""},"explanation":{"fr":"","en":"The reconciliation presents, for each class, the opening amount, additional provisions, amounts used, amounts reversed and the unwinding of the discount through to the closing amount (IAS 37, para. 84): 420,000 + 180,000 − 150,000 − 35,000 + 12,600 = 427,600.","es":""},"common_error":{"fr":"","en":"Forgetting the unwinding (415,000).","es":""},"format":"CALCULATION","placeholders":[{"id":"opening","value":"420000","unit":"EUR"},{"id":"additions","value":"180000","unit":"EUR"},{"id":"used","value":"150000","unit":"EUR"},{"id":"reversed","value":"35000","unit":"EUR"},{"id":"unwinding","value":"12600","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Opening provision","es":""},"value":"420000","unit":"EUR"},{"label":{"fr":"","en":"Provisions made","es":""},"value":"180000","unit":"EUR"},{"label":{"fr":"","en":"Amounts used","es":""},"value":"150000","unit":"EUR"},{"label":{"fr":"","en":"Unused amounts reversed","es":""},"value":"35000","unit":"EUR"},{"label":{"fr":"","en":"Unwinding (passage of time)","es":""},"value":"12600","unit":"EUR"}],"steps":[{"id":"CLOSING","label":{"fr":"","en":"Closing provision","es":""},"answer":427600,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"CLOSING","meaning":{"fr":"","en":"Closing provision","es":""},"expression":"a + b - c - d + e","variables":[{"symbol":"a","meaning":{"fr":"","en":"Opening provision","es":""},"value":420000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"Provisions made","es":""},"value":180000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Amounts used","es":""},"value":150000,"unit":"EUR"},{"symbol":"d","meaning":{"fr":"","en":"Unused amounts reversed","es":""},"value":35000,"unit":"EUR"},{"symbol":"e","meaning":{"fr":"","en":"Unwinding (passage of time)","es":""},"value":12600,"unit":"EUR"}],"result":427600,"unit":"EUR","rationale":{"fr":"","en":"The reconciliation presents, for each class, the opening amount, additional provisions, amounts used, amounts reversed and the unwinding of the discount through to the closing amount (IAS 37, para. 84): 420,000 + 180,000 − 150,000 − 35,000 + 12,600 = 427,600.","es":""}}],"references":["REF.IAS37.84"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000211","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"CALCULATION","context":"V1_VG.IAS37.000019","tested_point":"VG.IAS37.000019","difficulty":"ADVANCED","source":"V1","format":"NUMERICAL","estimated_time_s":180,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"For its \"litigation and contractual warranties\" class, Wimerane has: opening balance {opening_balance}; new provisions {new_provisions}; reversals of unused amounts {reversals}; unwinding and effect of the change in the discount rate {time_and_rate_effect}; closing balance {closing_balance}. What amount of provisions used must appear in the reconciliation?","es":""},"explanation":{"fr":"","en":"The reconciliation presents the amounts used among the movements of the period (IAS 37, para. 84). They are derived from the reconciliation: 1,150,000 + 260,000 − 90,000 + 41,000 − 1,018,000 = 343,000.","es":""},"common_error":{"fr":"","en":"Omitting the time and rate effect (302,000).","es":""},"format":"CALCULATION","placeholders":[{"id":"opening_balance","value":"1150000","unit":"EUR"},{"id":"new_provisions","value":"260000","unit":"EUR"},{"id":"reversals","value":"90000","unit":"EUR"},{"id":"time_and_rate_effect","value":"41000","unit":"EUR"},{"id":"closing_balance","value":"1018000","unit":"EUR"}],"data":[{"label":{"fr":"","en":"Opening balance","es":""},"value":"1150000","unit":"EUR"},{"label":{"fr":"","en":"New provisions","es":""},"value":"260000","unit":"EUR"},{"label":{"fr":"","en":"Reversals of unused amounts","es":""},"value":"90000","unit":"EUR"},{"label":{"fr":"","en":"Unwinding and rate effect","es":""},"value":"41000","unit":"EUR"},{"label":{"fr":"","en":"Closing balance","es":""},"value":"1018000","unit":"EUR"}],"steps":[{"id":"AMOUNTS_USED","label":{"fr":"","en":"Amounts used","es":""},"answer":343000,"tolerance":0,"unit":"EUR"}],"formula":{"lines":[{"step":"AMOUNTS_USED","meaning":{"fr":"","en":"Amounts used","es":""},"expression":"a + b - c + d - e","variables":[{"symbol":"a","meaning":{"fr":"","en":"Opening balance","es":""},"value":1150000,"unit":"EUR"},{"symbol":"b","meaning":{"fr":"","en":"New provisions","es":""},"value":260000,"unit":"EUR"},{"symbol":"c","meaning":{"fr":"","en":"Reversals of unused amounts","es":""},"value":90000,"unit":"EUR"},{"symbol":"d","meaning":{"fr":"","en":"Unwinding and rate effect","es":""},"value":41000,"unit":"EUR"},{"symbol":"e","meaning":{"fr":"","en":"Closing balance","es":""},"value":1018000,"unit":"EUR"}],"result":343000,"unit":"EUR"}],"rationale":{"fr":"","en":"The reconciliation presents the amounts used among the movements of the period (IAS 37, para. 84).","es":""},"references":["REF.IAS37.84"]}},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000212","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000212","tested_point":"QST.IAS37.000212","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §85"],"exercise":{"prompt":{"fr":"","en":"For each class of provision, what qualitative information must Ardenay disclose?","es":""},"explanation":{"fr":"","en":"For each class, the entity discloses a brief description of the nature of the obligation and the expected timing of outflows, an indication of the uncertainties about their amount or timing, with, where necessary, the major assumptions about future events, and the amount of any expected reimbursement, stating the amount of any asset recognised for it (IAS 37, para. 85).","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The nature of the obligation and the expected timing of outflows.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The name of each beneficiary of the future payments.","es":""},"correct":false,"feedback":{"fr":"","en":"The identity of the beneficiaries is not required.","es":""}},{"id":"C","text":{"fr":"","en":"The uncertainties about the amount or timing and, where necessary, the major assumptions.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The amount of any expected reimbursement and of the asset recognised for it.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"The expected tax saving on each provision.","es":""},"correct":false,"feedback":{"fr":"","en":"Tax effects are not part of this information.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000213","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000213","tested_point":"QST.IAS37.000213","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Barvelle is considering presenting its normal product warranties and the amounts at stake in legal proceedings as a single \"other provisions\" class. Is this acceptable?","es":""},"explanation":{"fr":"","en":"To aggregate provisions into a class, their nature must be sufficiently similar for a single statement to meet the disclosure requirements; normal warranties and amounts subject to legal proceedings do not form a single class (IAS 37, para. 87).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Yes, if the total of the class is below the materiality threshold.","es":""},"correct":false,"feedback":{"fr":"","en":"Materiality does not permit grouping different natures in one class.","es":""}},{"id":"B","text":{"fr":"","en":"No, their nature is too different for a common description.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Yes, as all provisions can be grouped if they are uncertain.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty is common to all provisions; it does not define a class.","es":""}},{"id":"D","text":{"fr":"","en":"Yes, provided a single reconciliation is presented.","es":""},"correct":false,"feedback":{"fr":"","en":"A single table does not cure the heterogeneity of the class.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000214","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000214","tested_point":"QST.IAS37.000214","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37 §84"],"exercise":{"prompt":{"fr":"","en":"Cavelline's reconciliation for its \"decommissioning\" class shows an unexplained difference between the opening balance plus the movements presented and the closing balance. Additions, amounts used and reversals are correct. What is the most likely cause?","es":""},"explanation":{"fr":"","en":"The reconciliation must include the increase in the discounted amount arising from the passage of time and the effect of any change in the discount rate (IAS 37, para. 84). For a discounted decommissioning provision, omitting them prevents the table from reconciling.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The previous period's comparative information was omitted from the table.","es":""},"correct":false,"feedback":{"fr":"","en":"Comparatives are not required and would not explain the difference for the period.","es":""}},{"id":"B","text":{"fr":"","en":"The opening balance should have been discounted a second time.","es":""},"correct":false,"feedback":{"fr":"","en":"The opening balance does not have to be discounted again.","es":""}},{"id":"C","text":{"fr":"","en":"The unwinding and the effect of the change in the discount rate were omitted.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Reversals should have been added instead of deducted.","es":""},"correct":false,"feedback":{"fr":"","en":"Reversals reduce the provision; the question states that they are correct.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000215","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000215","tested_point":"QST.IAS37.000215","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Where a provision and a contingent liability arise from the same set of circumstances, the disclosures are made in a way that shows the link between them.","es":""},"explanation":{"fr":"","en":"Where a provision and a contingent liability arise from the same set of circumstances, the entity makes the related disclosures in a way that shows the link between the provision and the contingent liability (IAS 37, para. 88).","es":""},"common_error":{"fr":"","en":"Presenting the provided part and the contingent part separately, with no link.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000216","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.PROVISIONS"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000216","tested_point":"QST.IAS37.000216","difficulty":"EXPERT","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"roll-forward"},"references":["IAS 37","IAS 37 §85"],"exercise":{"prompt":{"fr":"","en":"Dornavel is preparing its classes of provision. Which groupings meet the requirement of a sufficiently similar nature?","es":""},"explanation":{"fr":"","en":"A class requires a nature similar enough for a single statement to meet the disclosure requirements on nature, timing and uncertainties (IAS 37, para. 87; IAS 37, para. 85). Grouping involves judgement: warranties of the same type or comparable site restorations may form a class; normal warranties and legal claims, or decommissioning and onerous contracts, may not.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Normal product warranties and disputes with former distributors.","es":""},"correct":false,"feedback":{"fr":"","en":"Normal warranties and disputes do not form a single class.","es":""}},{"id":"B","text":{"fr":"","en":"Normal warranties on the three ranges of household appliances sold.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Decommissioning of installations and onerous contracts.","es":""},"correct":false,"feedback":{"fr":"","en":"Different natures call for different descriptions.","es":""}},{"id":"D","text":{"fr":"","en":"Restoration of quarries worked using the same process.","es":""},"correct":true},{"id":"E","text":{"fr":"","en":"Commercial disputes and restructurings, on the grounds that they are all uncertain.","es":""},"correct":false,"feedback":{"fr":"","en":"Uncertainty, common to all provisions, is not enough to define a class.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000217","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000217","tested_point":"QST.IAS37.000217","difficulty":"INTERMEDIATE","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §86"],"exercise":{"prompt":{"fr":"","en":"Unless the outflow is remote, the entity briefly describes the nature of each class of contingent liability and, where practicable, gives an estimate of its financial effect, an indication of the uncertainties and the possibility of any reimbursement.","es":""},"explanation":{"fr":"","en":"For each class of contingent liability whose outflow is not remote, the entity gives a brief description of its nature and, where practicable, an estimate of its financial effect measured under the measurement rules for provisions, an indication of the uncertainties about the amount or timing and the possibility of any reimbursement (IAS 37, para. 86).","es":""},"common_error":{"fr":"","en":"Merely mentioning that a dispute exists, without an estimate where one is practicable.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000218","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000218","tested_point":"QST.IAS37.000218","difficulty":"INTERMEDIATE","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"From when must Ermolane describe a contingent asset in its notes?","es":""},"explanation":{"fr":"","en":"Where an inflow of economic benefits is probable, the entity gives a brief description of the nature of the contingent assets at the reporting date and, where practicable, an estimate of their financial effect (IAS 37, para. 89). A merely possible inflow calls for no disclosure.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"As soon as the inflow is possible, even if slight.","es":""},"correct":false,"feedback":{"fr":"","en":"A merely possible inflow gives rise to no disclosure.","es":""}},{"id":"B","text":{"fr":"","en":"When an inflow of economic benefits is probable.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Only when the inflow is virtually certain and its amount settled.","es":""},"correct":false,"feedback":{"fr":"","en":"A virtually certain inflow leads to recognising the asset, which is no longer contingent.","es":""}},{"id":"D","text":{"fr":"","en":"Never: a contingent asset is not recognised.","es":""},"correct":false,"feedback":{"fr":"","en":"Non-recognition does not prevent disclosure when the inflow is probable.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000219","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000219","tested_point":"QST.IAS37.000219","difficulty":"INTERMEDIATE","source":"V1","format":"MULTIPLE_CHOICE","estimated_time_s":70,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §86"],"exercise":{"prompt":{"fr":"","en":"For a contingent liability whose outflow is not remote, what information must Floravel disclose?","es":""},"explanation":{"fr":"","en":"The entity gives a brief description of the nature of the contingent liability and, where practicable, an estimate of its financial effect, an indication of the uncertainties relating to the amount or timing of the outflow and the possibility of any reimbursement (IAS 37, para. 86). No entry or reserve is required.","es":""},"format":"MULTIPLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A brief description of its nature.","es":""},"correct":true},{"id":"B","text":{"fr":"","en":"The entry that would have been recorded had the liability been probable.","es":""},"correct":false,"feedback":{"fr":"","en":"No hypothetical entry is required.","es":""}},{"id":"C","text":{"fr":"","en":"Where practicable, an estimate of its financial effect.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The amount of an equity reserve set up against it.","es":""},"correct":false,"feedback":{"fr":"","en":"No reserve is required.","es":""}},{"id":"E","text":{"fr":"","en":"The possibility of any reimbursement.","es":""},"correct":true}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000220","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000220","tested_point":"QST.IAS37.000220","difficulty":"ADVANCED","source":"V1","format":"TRUE_FALSE","estimated_time_s":40,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §91"],"exercise":{"prompt":{"fr":"","en":"Where information required about a contingent liability or a contingent asset is not disclosed because it is not practicable to do so, that fact is stated.","es":""},"explanation":{"fr":"","en":"Where any of the information required about contingent liabilities or contingent assets is not disclosed because it is not practicable to do so, that fact is stated (IAS 37, para. 91).","es":""},"common_error":{"fr":"","en":"Omitting the estimate without saying so.","es":""},"format":"TRUE_FALSE","answer":true},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000221","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"RULE_KNOWLEDGE","context":"V1_QST.IAS37.000221","tested_point":"QST.IAS37.000221","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":50,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"In the note describing probable compensation it is claiming from a former supplier, Gramalis wishes to write \"income of 2,000,000 secured for 20X6\". Which requirement does this wording disregard?","es":""},"explanation":{"fr":"","en":"Disclosure of contingent assets must avoid giving misleading indications of the likelihood of income arising (IAS 37, para. 90). Presenting merely probable income as \"secured\" misleads the reader.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"The requirement to recognise the asset as soon as the inflow is probable.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable contingent asset is not recognised.","es":""}},{"id":"B","text":{"fr":"","en":"The prohibition on mentioning a contingent asset in the notes.","es":""},"correct":false,"feedback":{"fr":"","en":"A probable contingent asset must, on the contrary, be described.","es":""}},{"id":"C","text":{"fr":"","en":"The requirement not to give a misleading impression of the likelihood of income.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"The requirement to state the name of the supplier concerned.","es":""},"correct":false,"feedback":{"fr":"","en":"The debtor's name is not what is at stake in the wording.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000222","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000222","tested_point":"QST.IAS37.000222","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37"],"exercise":{"prompt":{"fr":"","en":"Hennevane is in dispute with a competitor; publishing its estimate of the financial effect could, in this extremely rare case, seriously prejudice its position in the ongoing negotiation. What may it do?","es":""},"explanation":{"fr":"","en":"In extremely rare cases, where disclosure of some or all of the information could seriously prejudice the entity's position in a dispute with other parties, the entity need not disclose it, but it discloses the general nature of the dispute, together with the fact that, and the reason why, the information has not been disclosed (IAS 37, para. 92).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"Publish nothing at all about the dispute.","es":""},"correct":false,"feedback":{"fr":"","en":"The exemption does not remove the general nature of the dispute, the omission and its reason.","es":""}},{"id":"B","text":{"fr":"","en":"Omit the estimate, stating the general nature of the dispute, the omission and the reason for it.","es":""},"correct":true},{"id":"C","text":{"fr":"","en":"Publish the estimate in a separate, unaudited document.","es":""},"correct":false,"feedback":{"fr":"","en":"The standard does not provide for this workaround.","es":""}},{"id":"D","text":{"fr":"","en":"Replace the estimate with a deliberately understated amount.","es":""},"correct":false,"feedback":{"fr":"","en":"A deliberately understated amount would be misleading.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000223","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000223","tested_point":"QST.IAS37.000223","difficulty":"ADVANCED","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §86","IAS 37"],"exercise":{"prompt":{"fr":"","en":"Issorane is reviewing three unrecognised files: (1) a claim against it, outflow considered remote; (2) a claim against it, outflow possible; (3) an action it has brought, gain considered merely possible. What does it disclose?","es":""},"explanation":{"fr":"","en":"A contingent liability is described unless the outflow is remote (IAS 37, para. 86): only file 2 is disclosed among the liabilities. A contingent asset is described only if the inflow is probable (IAS 37, para. 89): file 3, merely possible, calls for no disclosure.","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"All three files, for completeness.","es":""},"correct":false,"feedback":{"fr":"","en":"A remote liability and a merely possible asset are not described.","es":""}},{"id":"B","text":{"fr":"","en":"Files 2 and 3, both being possible.","es":""},"correct":false,"feedback":{"fr":"","en":"The disclosure thresholds are asymmetric: a possible asset is not described.","es":""}},{"id":"C","text":{"fr":"","en":"Only file 2.","es":""},"correct":true},{"id":"D","text":{"fr":"","en":"Only file 3, the liabilities not being probable.","es":""},"correct":false,"feedback":{"fr":"","en":"It is the other way round: the possible asset is not described; the possible liability is.","es":""}}]},"scope":"CORE_STUDENT"},{"key":"QST.IAS37.000226","standard_id":"IAS37","concept_ids":["IAS37.DISCLOSURE.CONTINGENCIES"],"dimension":"APPLICATION","context":"V1_QST.IAS37.000226","tested_point":"QST.IAS37.000226","difficulty":"EXPERT","source":"V1","format":"SINGLE_CHOICE","estimated_time_s":150,"lesson_id":null,"review":{"standard_id":"IAS37","lesson_id":"LS.IAS37.000012","section_id":"contingent-liabilities-disclosure"},"references":["IAS 37 §86","IAS 37 §91"],"exercise":{"prompt":{"fr":"","en":"Lectorane faces an emerging class action whose outflow is possible; the number of claimants and the basis of the claims make any estimate of the financial effect impracticable at the reporting date. Which note complies?","es":""},"explanation":{"fr":"","en":"A contingent liability that is not remote is described with, where practicable, an estimate of its financial effect, the uncertainties and the possibility of any reimbursement (IAS 37, para. 86). Where the estimate is not practicable, that fact is stated (IAS 37, para. 91).","es":""},"format":"SINGLE_CHOICE","options":[{"id":"A","text":{"fr":"","en":"A note merely stating that \"a dispute exists\".","es":""},"correct":false,"feedback":{"fr":"","en":"Such a brief note omits the uncertainties and does not report the impracticability.","es":""}},{"id":"B","text":{"fr":"","en":"No note until an amount can be estimated.","es":""},"correct":false,"feedback":{"fr":"","en":"The inability to estimate does not exempt from describing the contingent liability.","es":""}},{"id":"C","text":{"fr":"","en":"A provision of a lump-sum amount in place of the note.","es":""},"correct":false,"feedback":{"fr":"","en":"A contingent liability is not recognised, even less at a lump-sum amount.","es":""}},{"id":"D","text":{"fr":"","en":"A note describing the dispute and its uncertainties, and stating that the estimate is not practicable.","es":""},"correct":true}]},"scope":"CORE_STUDENT"}],"reviewTitles":{"LX.IAS37.000001":"Objective and scope of IAS 37 — The objective of the standard","LX.IAS37.000002":"Objective and scope of IAS 37 — The objective of the standard","LX.IAS37.000003":"Objective and scope of IAS 37 — The approach in four questions","LX.IAS37.000004":"Objective and scope of IAS 37 — Executory contracts: out of scope, unless they are onerous","LX.IAS37.000005":"Objective and scope of IAS 37 — Executory contracts: out of scope, unless they are onerous","LX.IAS37.000006":"Objective and scope of IAS 37 — When another standard is more specific","LX.IAS37.000007":"Objective and scope of IAS 37 — Areas of judgement at the boundary of the scope","LX.IAS37.000008":"Objective and scope of IAS 37 — 'Provision': a liability, never an adjustment to an asset","LX.IAS37.000009":"Objective and scope of IAS 37 — 'Provision': a liability, never an adjustment to an asset","LX.IAS37.000010":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","LX.IAS37.000011":"The vocabulary of IAS 37: provision, obligation, contingencies — Provision, trade payable, accrual: a matter of uncertainty","LX.IAS37.000012":"The vocabulary of IAS 37: provision, obligation, contingencies — Provision, trade payable, accrual: a matter of uncertainty","LX.IAS37.000013":"The vocabulary of IAS 37: provision, obligation, contingencies — Obligating event, legal obligation, constructive obligation","LX.IAS37.000014":"The vocabulary of IAS 37: provision, obligation, contingencies — Obligating event, legal obligation, constructive obligation","LX.IAS37.000015":"The vocabulary of IAS 37: provision, obligation, contingencies — Contingent liability and contingent asset","LX.IAS37.000016":"The vocabulary of IAS 37: provision, obligation, contingencies — Classifying an item in four questions","LX.IAS37.000017":"The vocabulary of IAS 37: provision, obligation, contingencies — Contingent liability and contingent asset","LX.IAS37.000018":"The vocabulary of IAS 37: provision, obligation, contingencies — The areas of judgement in the definitions","LX.IAS37.000019":"Recognising a provision: the three conditions — The rule: three cumulative conditions","LX.IAS37.000020":"Recognising a provision: the three conditions — The decision grid","LX.IAS37.000021":"Recognising a provision: the three conditions — Similar obligations: reason on the whole","LX.IAS37.000022":"Recognising a provision: the three conditions — Similar obligations: reason on the whole","LX.IAS37.000023":"Recognising a provision: the three conditions — The recognition entry","LX.IAS37.000024":"Recognising a provision: the three conditions — The recognition entry","LX.IAS37.000025":"Recognising a provision: the three conditions — The reliable estimate: almost always possible","LX.IAS37.000026":"Recognising a provision: the three conditions — The reliable estimate: almost always possible","LX.IAS37.000027":"Recognising a provision: the three conditions — Example: four files, four answers","LX.IAS37.000028":"The present obligation and the obligating event — In case of doubt: more likely than not","LX.IAS37.000029":"The present obligation and the obligating event — In case of doubt: more likely than not","LX.IAS37.000030":"The present obligation and the obligating event — Nothing for future operations","LX.IAS37.000031":"The present obligation and the obligating event — Nothing for future operations","LX.IAS37.000032":"The present obligation and the obligating event — An obligation involves another party, informed","LX.IAS37.000033":"The present obligation and the obligating event — An obligation involves another party, informed","LX.IAS37.000034":"The present obligation and the obligating event — Draft legislation: virtual certainty of enactment","LX.IAS37.000035":"The present obligation and the obligating event — An event that becomes an obligating event later","LX.IAS37.000036":"The present obligation and the obligating event — An event that becomes an obligating event later","LX.IAS37.000037":"The present obligation and the obligating event — Nothing for future operations","LX.IAS37.000038":"The present obligation and the obligating event — The main areas of judgement: lawsuits, promises, legislation","LX.IAS37.000039":"The present obligation and the obligating event — The obligating event: no realistic alternative left","LX.IAS37.000040":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","LX.IAS37.000041":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","LX.IAS37.000042":"Contingent liabilities and contingent assets — Joint and several liability: sharing the debt","LX.IAS37.000043":"Contingent liabilities and contingent assets — Joint and several liability: sharing the debt","LX.IAS37.000044":"Contingent liabilities and contingent assets — Reassessing the contingent liability at each reporting date","LX.IAS37.000045":"Contingent liabilities and contingent assets — Reassessing the contingent liability at each reporting date","LX.IAS37.000046":"Contingent liabilities and contingent assets — Joint and several liability: sharing the debt","LX.IAS37.000047":"Contingent liabilities and contingent assets — The approach: one probability scale for each direction","LX.IAS37.000048":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","LX.IAS37.000049":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","LX.IAS37.000050":"Contingent liabilities and contingent assets — The approach: one probability scale for each direction","LX.IAS37.000051":"Contingent liabilities and contingent assets — Reassessing the contingent asset","LX.IAS37.000052":"Contingent liabilities and contingent assets — Why this asymmetry?","LX.IAS37.000053":"Contingent liabilities and contingent assets — Reassessing the contingent asset","LX.IAS37.000054":"Measuring a provision: the best estimate — Before tax, risks included, without excess","LX.IAS37.000055":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","LX.IAS37.000056":"Measuring a provision: the best estimate — Large population: the expected value; continuous range: the mid-point","LX.IAS37.000057":"Measuring a provision: the best estimate — Large population: the expected value; continuous range: the mid-point","LX.IAS37.000058":"Measuring a provision: the best estimate — Large population: the expected value; continuous range: the mid-point","LX.IAS37.000059":"Measuring a provision: the best estimate — Large population: the expected value; continuous range: the mid-point","LX.IAS37.000060":"Measuring a provision: the best estimate — A single obligation: the most likely outcome, to be adjusted","LX.IAS37.000061":"Measuring a provision: the best estimate — Before tax, risks included, without excess","LX.IAS37.000062":"Measuring a provision: the best estimate — Before tax, risks included, without excess","LX.IAS37.000063":"Measuring a provision: the best estimate — Where do the estimates come from?","LX.IAS37.000064":"Measuring a provision: the best estimate — The approach in five steps","LX.IAS37.000065":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","LX.IAS37.000066":"Discounting, future events and gains on disposal — Numeric examples: restoration, decommissioning, technology","LX.IAS37.000067":"Discounting, future events and gains on disposal — Which discount rate?","LX.IAS37.000068":"Discounting, future events and gains on disposal — Which discount rate?","LX.IAS37.000069":"Discounting, future events and gains on disposal — The entries: as an expense or in the cost of the asset","LX.IAS37.000070":"Discounting, future events and gains on disposal — The entries: as an expense or in the cost of the asset","LX.IAS37.000071":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","LX.IAS37.000072":"Discounting, future events and gains on disposal — The approach in five steps","LX.IAS37.000073":"Discounting, future events and gains on disposal — The entries: as an expense or in the cost of the asset","LX.IAS37.000074":"Discounting, future events and gains on disposal — Gains on disposal do not reduce the provision","LX.IAS37.000075":"Discounting, future events and gains on disposal — Gains on disposal do not reduce the provision","LX.IAS37.000076":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","LX.IAS37.000077":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","LX.IAS37.000078":"Discounting, future events and gains on disposal — Numeric examples: restoration, decommissioning, technology","LX.IAS37.000079":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","LX.IAS37.000080":"Reimbursements expected from third parties — In profit or loss: net presentation permitted","LX.IAS37.000081":"Reimbursements expected from third parties — A separate asset, capped, and a gross provision","LX.IAS37.000082":"Reimbursements expected from third parties — A separate asset, capped, and a gross provision","LX.IAS37.000083":"Reimbursements expected from third parties — Domatrix's entries","LX.IAS37.000084":"Reimbursements expected from third parties — When the entity is not liable if the third party does not pay","LX.IAS37.000085":"Reimbursements expected from third parties — The approach in five steps","LX.IAS37.000086":"Reimbursements expected from third parties — Common mistakes","LX.IAS37.000087":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","LX.IAS37.000088":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","LX.IAS37.000089":"After recognition: remeasure, unwind, use, reverse — Unwinding of the discount: a borrowing cost","LX.IAS37.000090":"After recognition: remeasure, unwind, use, reverse — Numeric example: Brenvalia's provisions in N+1","LX.IAS37.000091":"After recognition: remeasure, unwind, use, reverse — Brenvalia's entries in N+1","LX.IAS37.000092":"After recognition: remeasure, unwind, use, reverse — Brenvalia's entries in N+1","LX.IAS37.000093":"After recognition: remeasure, unwind, use, reverse — A provision serves only its purpose","LX.IAS37.000094":"After recognition: remeasure, unwind, use, reverse — A provision serves only its purpose","LX.IAS37.000095":"After recognition: remeasure, unwind, use, reverse — The approach at each reporting date","LX.IAS37.000096":"After recognition: remeasure, unwind, use, reverse — Areas of judgement in the follow-up","LX.IAS37.000097":"Future operating losses and onerous contracts — No provision for future operating losses","LX.IAS37.000098":"Future operating losses and onerous contracts — No provision for future operating losses","LX.IAS37.000099":"Future operating losses and onerous contracts — No provision for future operating losses","LX.IAS37.000100":"Future operating losses and onerous contracts — Common mistakes","LX.IAS37.000101":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","LX.IAS37.000102":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","LX.IAS37.000103":"Future operating losses and onerous contracts — The cost of fulfilling a contract: incremental costs and other directly related costs","LX.IAS37.000104":"Future operating losses and onerous contracts — The cost of fulfilling a contract: incremental costs and other directly related costs","LX.IAS37.000105":"Future operating losses and onerous contracts — The cost of fulfilling a contract: incremental costs and other directly related costs","LX.IAS37.000106":"Future operating losses and onerous contracts — Pressalis's entry","LX.IAS37.000107":"Future operating losses and onerous contracts — The approach in six steps","LX.IAS37.000108":"Future operating losses and onerous contracts — First impair the assets, then provide","LX.IAS37.000109":"Future operating losses and onerous contracts — First impair the assets, then provide","LX.IAS37.000110":"Future operating losses and onerous contracts — Areas of judgement: cost allocation and exiting the contract","LX.IAS37.000111":"Future operating losses and onerous contracts — Common mistakes","LX.IAS37.000112":"Restructuring: when to provide, and for what — What is a restructuring?","LX.IAS37.000113":"Restructuring: when to provide, and for what — The board decision and the timing of the announcement","LX.IAS37.000114":"Restructuring: when to provide, and for what — The constructive obligation to restructure: a plan and a valid expectation","LX.IAS37.000115":"Restructuring: when to provide, and for what — The sale of an operation: no obligation without a binding agreement","LX.IAS37.000116":"Restructuring: when to provide, and for what — The sale of an operation: no obligation without a binding agreement","LX.IAS37.000117":"Restructuring: when to provide, and for what — The constructive obligation to restructure: a plan and a valid expectation","LX.IAS37.000118":"Restructuring: when to provide, and for what — The areas of judgement in a restructuring","LX.IAS37.000119":"Restructuring: when to provide, and for what — Common mistakes","LX.IAS37.000120":"Restructuring: when to provide, and for what — The constructive obligation to restructure: a plan and a valid expectation","LX.IAS37.000121":"Restructuring: when to provide, and for what — Which expenditures in the provision?","LX.IAS37.000122":"Restructuring: when to provide, and for what — Numeric example: the provision for closing the Northern plant","LX.IAS37.000123":"Restructuring: when to provide, and for what — Which expenditures in the provision?","LX.IAS37.000124":"Restructuring: when to provide, and for what — Ventarel's entry","LX.IAS37.000125":"Restructuring: when to provide, and for what — Which expenditures in the provision?","LX.IAS37.000126":"Restructuring: when to provide, and for what — Common mistakes","LX.IAS37.000127":"Restructuring: when to provide, and for what — Which expenditures in the provision?","LX.IAS37.000128":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","LX.IAS37.000129":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","LX.IAS37.000130":"Disclosures about provisions and contingencies — Qualitative information about provisions","LX.IAS37.000131":"Disclosures about provisions and contingencies — Forming classes and linking provisions and contingent liabilities","LX.IAS37.000132":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","LX.IAS37.000133":"Disclosures about provisions and contingencies — Forming classes and linking provisions and contingent liabilities","LX.IAS37.000134":"Disclosures about provisions and contingencies — Information on contingent liabilities","LX.IAS37.000135":"Disclosures about provisions and contingencies — Contingent assets and impracticable information","LX.IAS37.000136":"Disclosures about provisions and contingencies — The serious-prejudice exemption","LX.IAS37.000137":"Disclosures about provisions and contingencies — The serious-prejudice exemption","LX.IAS37.000138":"Disclosures about provisions and contingencies — Example: Quorval's 'Contingencies' note at 31 December N","LX.IAS37.000139":"Disclosures about provisions and contingencies — Building the note in six steps","LX.IAS37.000140":"Future operating losses and onerous contracts — Least net cost of exiting: fulfil or exit?","LX.IAS37.000141":"Future operating losses and onerous contracts — Least net cost of exiting: fulfil or exit?","LX.IAS37.000142":"Future operating losses and onerous contracts — Least net cost of exiting: fulfil or exit?","LX.IAS37.000143":"Future operating losses and onerous contracts — Least net cost of exiting: fulfil or exit?","QST.IAS37.000001":"Objective and scope of IAS 37 — The objective of the standard","QST.IAS37.000002":"Objective and scope of IAS 37 — The objective of the standard","QST.IAS37.000003":"Objective and scope of IAS 37 — The objective of the standard","QST.IAS37.000004":"Objective and scope of IAS 37 — The objective of the standard","QST.IAS37.000005":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000006":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000007":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000008":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000009":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000010":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000011":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000012":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000013":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000014":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000015":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000016":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000017":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000018":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000019":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000020":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000021":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000022":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000023":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000024":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000025":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000026":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000027":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000028":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000029":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000031":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000033":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000034":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000035":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000036":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000039":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000040":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000041":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000042":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000043":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000044":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000045":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000046":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000047":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000048":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000049":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000050":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000051":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000052":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000053":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000054":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000055":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000056":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000057":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000058":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000059":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000060":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000061":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000062":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000065":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000066":"The present obligation and the obligating event — In case of doubt: more likely than not","QST.IAS37.000067":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000068":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000069":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000070":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000071":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000072":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000073":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000074":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000075":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000076":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000077":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000078":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000079":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000080":"Contingent liabilities and contingent assets — The contingent liability: not on the balance sheet, but in the notes","QST.IAS37.000081":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000082":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000083":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000084":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000085":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000088":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000089":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000090":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000091":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000092":"Recognising a provision: the three conditions — The rule: three cumulative conditions","QST.IAS37.000093":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000094":"Contingent liabilities and contingent assets — The contingent asset: caution about hopes of gain","QST.IAS37.000095":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000096":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000097":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000098":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000099":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000100":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000101":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000102":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000103":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000105":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000106":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000107":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000108":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000110":"Measuring a provision: the best estimate — The rule: the expenditure required to settle the obligation at the reporting date","QST.IAS37.000111":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000112":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000113":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000114":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000117":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000118":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000119":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000120":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000121":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000122":"Discounting, future events and gains on disposal — The rule: discount when the effect is material","QST.IAS37.000123":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000124":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000125":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000126":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000127":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000128":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000129":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000130":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000131":"Discounting, future events and gains on disposal — Future events: only with sufficient objective evidence","QST.IAS37.000132":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000133":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000134":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000135":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000138":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000139":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000140":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000141":"Reimbursements expected from third parties — The rule: recognise the reimbursement only if it is virtually certain","QST.IAS37.000142":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000143":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000144":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000145":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000146":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000147":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000151":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000152":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000153":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000154":"After recognition: remeasure, unwind, use, reverse — Reviewing each provision at each reporting date","QST.IAS37.000155":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000156":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000157":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000158":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000159":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000160":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000161":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000162":"Future operating losses and onerous contracts — No provision for future operating losses","QST.IAS37.000163":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000164":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000165":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000166":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000167":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000168":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000171":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000172":"Objective and scope of IAS 37 — The scope: all entities, with two broad exclusions","QST.IAS37.000173":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000174":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000175":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000176":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000177":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000179":"Future operating losses and onerous contracts — The onerous contract: an obligation to be provided for","QST.IAS37.000180":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000181":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000182":"The vocabulary of IAS 37: provision, obligation, contingencies — Liability and provision","QST.IAS37.000183":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000184":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000185":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000186":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000187":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000188":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000189":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000190":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000191":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000192":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000193":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000194":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000195":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000196":"Restructuring: when to provide, and for what — What is a restructuring?","QST.IAS37.000199":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000200":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000201":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000202":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000205":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000206":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000207":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000208":"Restructuring: when to provide, and for what — Which expenditures in the provision?","QST.IAS37.000209":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000210":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000211":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000212":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000213":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000214":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000215":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000216":"Disclosures about provisions and contingencies — The reconciliation table by class of provisions","QST.IAS37.000217":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000218":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000219":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000220":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000221":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000222":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000223":"Disclosures about provisions and contingencies — Information on contingent liabilities","QST.IAS37.000226":"Disclosures about provisions and contingencies — Information on contingent liabilities"}}