CERTYNEX IFRS ACADEMY

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?

The accountant should have waited for the appeal period to expire.

The accountant should have removed all disclosure, as the dispute has been decided.

The January judgment sheds light on the position at the reporting date and had to be taken into account: a provision is required.

The contingent liability should have been increased by the amount awarded.