CERTYNEX IFRS ACADEMY

A working paper analyses the contingent settlement provisions of several issued instruments. Which of the working paper's conclusions is wrong?

A non-genuine provision, extremely rare, highly abnormal and very unlikely, is not enough to classify the instrument as a liability.

A provision whose trigger is outside the control of the issuer and the holder is in principle analysed as an obligation to deliver cash.

When the issuer has the unconditional right to avoid delivery, the contingent provision does not in principle lead to a liability.

A contingent settlement provision can be ignored as soon as management estimates the probability of the event at less than 10%.