CERTYNEX IFRS ACADEMY

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?

The reimbursement should only have been disclosed in the notes.

The provision should have been presented net of the reimbursement.

The reimbursement asset cannot exceed the provision: it is limited to 70,000.

The provision should have been increased to 90,000.