CERTYNEX IFRS ACADEMY

In February, a court orders Metence to compensate a customer for a defective delivery made in November. The accountant merely describes a contingent liability in the notes to the accounts for the year ended 31 December. What is the error?

The judgment should have been ignored, as it comes after the reporting date and before authorisation.

The compensation should have been recognised in the following year's accounts only.

The judgment confirms an obligation existing at the reporting date: a provision must be recognised.

There is no error, disclosure of a contingent liability being enough for any dispute pending at the reporting date.