Provisions roll-forward

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  SITE_RESTORATION

• Carrying amount at the beginning of the period

  NumberRequired

  550,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

  550,000

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

  8 %

• Amounts used (expenditures incurred and charged against the provision)

  Number

  54,000

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  540,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

• Closing balance of the provision account (trial balance)

  NumberRequired

  540,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  44,000

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  540,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  0

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Debit Provision expense ← Provisions made for new obligations of the period ; Credit Provision ← Provisions made for new obligations of the period

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Account	Debit	Credit
  Borrowing cost (finance cost)	44,000
  Provision		44,000

• Use of the provision

  Entry

  Account	Debit	Credit
  Provision	54,000
  Cash		54,000

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  A single class (sufficiently similar nature)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedNot evaluated
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedPass
• The use entry is balancedPass
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

-54,000

Liabilities

-10,000

Profit or loss

-44,000

OCI

0

Equity

-44,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  PRODUCT_WARRANTIES

• Carrying amount at the beginning of the period

  NumberRequired

  300,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

  210,000

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  90,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  180,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  270,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  270,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  180,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	180,000
  Provision		180,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Account	Debit	Credit
  Provision	210,000
  Cash		210,000

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedPass
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

-210,000

Liabilities

-30,000

Profit or loss

-180,000

OCI

0

Equity

-180,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  LITIGATION

• Carrying amount at the beginning of the period

  NumberRequired

  400,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  310,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

• Closing balance of the provision account (trial balance)

  NumberRequired

  310,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  90,000

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  310,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  -90,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Debit Provision expense ← Provisions made for new obligations of the period ; Credit Provision ← Provisions made for new obligations of the period

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Account	Debit	Credit
  Provision	90,000
  Provision expense (reversal)		90,000

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  Not virtually certain: no asset recognised

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedNot evaluated
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedNot evaluated
• The reversal entry is balancedPass
• The reimbursement entry is balancedNot evaluated

Assets

0

Liabilities

-90,000

Profit or loss

90,000

OCI

0

Equity

90,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  ENVIRONMENT

• Carrying amount at the beginning of the period

  NumberRequired

  0

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  0

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  500,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  500,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

  350,000

• Amount of the provision to which the reimbursement relates

  Number

  500,000

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  500,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  350,000

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  150,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	500,000
  Provision		500,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Account	Debit	Credit
  Reimbursement receivable	350,000
  Reimbursement income		350,000

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  Virtually certain: separate asset capped at the amount of the provision

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedNot evaluated
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedPass

Assets

350,000

Liabilities

500,000

Profit or loss

-150,000

OCI

0

Equity

-150,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  SITE_RESTORATION

• Carrying amount at the beginning of the period

  NumberRequired

  800,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

  800,000

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

  5 %

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  840,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

• Closing balance of the provision account (trial balance)

  NumberRequired

  840,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  40,000

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  840,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  0

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Debit Provision expense ← Provisions made for new obligations of the period ; Credit Provision ← Provisions made for new obligations of the period

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Account	Debit	Credit
  Borrowing cost (finance cost)	40,000
  Provision		40,000

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedNot evaluated
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedPass
• The use entry is balancedNot evaluated
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

0

Liabilities

40,000

Profit or loss

-40,000

OCI

0

Equity

-40,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  PRODUCT_WARRANTIES

• Carrying amount at the beginning of the period

  NumberRequired

  410,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

  230,000

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  180,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  137,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  317,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  317,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  137,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	137,000
  Provision		137,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Account	Debit	Credit
  Provision	230,000
  Cash		230,000

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedPass
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

-230,000

Liabilities

-93,000

Profit or loss

-137,000

OCI

0

Equity

-137,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  LITIGATION

• Carrying amount at the beginning of the period

  NumberRequired

  260,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

  60,000

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  150,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  500,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  650,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

  300,000

• Amount of the provision to which the reimbursement relates

  Number

  500,000

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  50,000

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  650,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  300,000

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  150,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	500,000
  Provision		500,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Account	Debit	Credit
  Provision	60,000
  Cash		60,000

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Account	Debit	Credit
  Provision	50,000
  Provision expense (reversal)		50,000

• Reimbursement asset

  Entry

  Account	Debit	Credit
  Reimbursement receivable	300,000
  Reimbursement income		300,000

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  Virtually certain: separate asset capped at the amount of the provision

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedPass
• The reversal entry is balancedPass
• The reimbursement entry is balancedPass

Assets

240,000

Liabilities

390,000

Profit or loss

-150,000

OCI

0

Equity

-150,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  ENVIRONMENT

• Carrying amount at the beginning of the period

  NumberRequired

  1,600,000

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

  1,600,000

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

  5 %

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  1,800,000

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  750,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  2,550,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  80,000

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  120,000

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  2,550,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  870,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	750,000
  Provision		750,000

• Additional provision

  Entry

  Account	Debit	Credit
  Provision expense	120,000
  Provision		120,000

• Unwinding of the discount

  Entry

  Account	Debit	Credit
  Borrowing cost (finance cost)	80,000
  Provision		80,000

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedPass
• The unwinding entry is balancedPass
• The use entry is balancedNot evaluated
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

0

Liabilities

950,000

Profit or loss

-950,000

OCI

0

Equity

-950,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  RESTRUCTURING

• Carrying amount at the beginning of the period

  NumberRequired

  0

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  0

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  745,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  745,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  745,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  745,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	745,000
  Provision		745,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedNot evaluated
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

0

Liabilities

745,000

Profit or loss

-745,000

OCI

0

Equity

-745,000

• Class of provisions (nature of the obligations, expected timing of outflows)

  TextRequired

  ONEROUS_CONTRACTS

• Carrying amount at the beginning of the period

  NumberRequired

  0

• Discounted part of the opening provision (equal to the opening balance if the whole class is discounted)

  Number

• Pre-tax discount rate applied at the beginning of the period (%)

  Number

• Amounts used (expenditures incurred and charged against the provision)

  Number

• Current best estimate, at the reporting date, of the obligations existing at the beginning of the period

  NumberRequired

  0

  Management estimate (“Measurement of the provision”). If the discount rate changes, the revision includes its effect; this model presents it with the revision and the note shows it separately (para. 84).

• Provisions made for new obligations of the period

  Number

  50,000

• Closing balance of the provision account (trial balance)

  NumberRequired

  50,000

• Evidence obtained and referenced (category, document reference)

  EvidenceRequired

IAS 37 §59IAS 37 §60IAS 37 §61IAS 37 §62

• Points examined

  ChecklistRequired

  • Provision reviewed at each reporting date and adjusted to the current best estimate
  • Reversal when the outflow of resources is no longer probable
  • Increase due to the passage of time recognised as a borrowing cost
  • Only expenditures for which the provision was originally recognised are set against it

IAS 37 §53IAS 37 §54IAS 37 §55IAS 37 §56IAS 37 §57

• Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain)

  Number

• Amount of the provision to which the reimbursement relates

  Number

• Points examined

  Checklist

  • Reimbursement recognised only when virtually certain to be received if the entity settles the obligation
  • Separate asset, whose amount cannot exceed that of the provision
  • Expense relating to the provision presented net of the reimbursement recognised (option)
  • Entity liable for the full amount if the third party fails to pay: provision for the full amount and separate asset if the reimbursement is virtually certain
  • Entity not liable for the costs if the third party fails to pay: costs excluded from the provision

IAS 37 §53IAS 37 §54IAS 37 §59IAS 37 §60IAS 37 §84

• Unwinding of the discount for the period (discounted opening part × rate)

  Calculation

  Discounted part of the opening provision (equal to the opening balance if the whole class is discounted) ; Pre-tax discount rate applied at the beginning of the period (%)

  Teaching assumption: constant rate over the period and calculation on the discounted part of the opening provision; new provisions of the period are not unwound in this model.

• Additional provision (best estimate − carrying amount before revision, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

  Carrying amount before revision = opening + unwinding − amounts used; the difference with the current best estimate is an additional provision or a reversal (para. 59). Which standard does what: IAS 37 sets the revised amount of the provision; for a decommissioning obligation whose initial cost was included in an asset under IAS 16, the other side of this subsequent change falls under IFRIC 1, outside this template (IAS 16 / IFRIC 1 interaction — reading adopted in this course).

• Unused amounts reversed (carrying amount before revision − best estimate, if positive)

  CalculationRequired

  0

  Current best estimate, at the reporting date, of the obligations existing at the beginning of the period ; − Carrying amount at the beginning of the period ; − Unwinding of the discount for the period (discounted opening part × rate) ; Amounts used (expenditures incurred and charged against the provision)

• Carrying amount at the end of the period (opening + additions − amounts used − reversals + unwinding)

  CalculationRequired

  50,000

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Difference with the ledger balance (trial balance − recalculated closing)

  Calculation

  0

  Carrying amount at the beginning of the period ; Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Amounts used (expenditures incurred and charged against the provision) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Unwinding of the discount for the period (discounted opening part × rate) ; Closing balance of the provision account (trial balance)

• Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Calculation

  Virtually certain reimbursement expected from a third party (insurance, indemnity, supplier warranty; 0 if not virtually certain) ; Amount of the provision to which the reimbursement relates

• Net expense relating to provisions if the option is taken (additions − reversals − reimbursement recognised)

  Calculation

  50,000

  Provisions made for new obligations of the period ; Additional provision (best estimate − carrying amount before revision, if positive) ; − Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; − Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Presentation option (para. 54): the expense may be presented net of the reimbursement recognised. The unwinding, a borrowing cost (para. 60), is not included.

• New provisions of the period

  Entry

  Account	Debit	Credit
  Provision expense	50,000
  Provision		50,000

• Additional provision

  Entry

  Debit Provision expense ← Additional provision (best estimate − carrying amount before revision, if positive) ; Credit Provision ← Additional provision (best estimate − carrying amount before revision, if positive)

• Unwinding of the discount

  Entry

  Debit Borrowing cost (finance cost) ← Unwinding of the discount for the period (discounted opening part × rate) ; Credit Provision ← Unwinding of the discount for the period (discounted opening part × rate)

• Use of the provision

  Entry

  Debit Provision ← Amounts used (expenditures incurred and charged against the provision) ; Credit Cash ← Amounts used (expenditures incurred and charged against the provision)

  Teaching assumption: the expenditures charged against the provision are paid in cash; adapt the credit side if they are still owed to third parties.

• Reversal of the provision

  Entry

  Debit Provision ← Unused amounts reversed (carrying amount before revision − best estimate, if positive) ; Credit Provision expense (reversal) ← Unused amounts reversed (carrying amount before revision − best estimate, if positive)

• Reimbursement asset

  Entry

  Debit Reimbursement receivable ← Reimbursement asset (lower of the virtually certain reimbursement and the provision) ; Credit Reimbursement income ← Reimbursement asset (lower of the virtually certain reimbursement and the provision)

  Teaching assumption: the reimbursement is credited to a separate income account; presenting the expense net (para. 54) is a presentation option, with no effect on the separate asset.

IAS 37 §53IAS 37 §56IAS 37 §57IAS 37

• Treatment of the expected reimbursement

  JudgmentRequired

  No reimbursement expected

  Virtually certain: separate asset capped at the amount of the provision / Not virtually certain: no asset recognised / Entity not liable if the third party fails to pay: costs excluded from the provision / No reimbursement expected

  Professional judgement documented from the facts of the case (terms of the insurance or indemnity contract, position of the third party, for example); this model puts no figure on virtual certainty.

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Grouping into a class

  JudgmentRequired

  Separate classes (different natures)

  A single class (sufficiently similar nature) / Separate classes (different natures)

• Rationale: facts relied on, analysis, alternative rejected

  TextRequired

• Impact by caption, derived from the entries above (the Notes line refers to the disclosures)

  TableRequired

IAS 37 §84IAS 37 §85

• Items passed to the notes workpaper (“Note: provisions and contingencies”)

  ChecklistRequired

  • Carrying amount at the beginning and end of the period
  • Additional provisions made, including increases to existing provisions
  • Amounts used
  • Unused amounts reversed
  • Increase due to the passage of time and effect of any change in the discount rate
  • Comparative information not required for this reconciliation
  • Nature, expected timing, uncertainties and major assumptions
  • Expected reimbursement and amount of the asset recognised for it

• Paragraphs cited in this workpaper (verification status shown from the register)

  References

• The closing carrying amount is recalculatedPass
• The roll-forward agrees with the ledger balancePass
• The treatment of the reimbursement is documentedPass
• The grouping into a class is documentedPass
• The new provisions entry is balancedPass
• The additional provision entry is balancedNot evaluated
• The unwinding entry is balancedNot evaluated
• The use entry is balancedNot evaluated
• The reversal entry is balancedNot evaluated
• The reimbursement entry is balancedNot evaluated

Assets

0

Liabilities

50,000

Profit or loss

-50,000

OCI

0

Equity

-50,000