AS 29 Provisions, Contingent Liabilities and Contingent Assets: CA Inter Summary Chart

The chart explains what a provision is, with the three conditions that must be met before recognition: a present obligation arising from a past event, a probable outflow of resources, and a reliable estimate of the amount. It then separates possible obligations and present obligations where one of the conditions is not met, and shows how a contingent liability is disclosed unless the chance of outflow is remote. Contingent assets, onerous contracts, restructuring provisions and decommissioning costs are also covered, along with the presentation of reimbursements.

Use the chart to test yourself on the three recognition conditions and the probability thresholds, which are the points most often asked in theory and case-based questions. Work through the restructuring cases, where only directly associated costs are included, and the rule on new laws requiring rectification of past damage. Read the review of provisions section before answering questions on changes in estimates, as it links directly to disclosure decisions.

These notes are meant for CA Inter students studying Advanced Accounting who are revising AS 29 and need a compact summary alongside the standard text. They are also useful for students preparing for practical questions on provisions in financial statements, where the choice between recognising a provision, disclosing a contingent liability or doing nothing has to be justified.

• Recognition conditions of provisions
• Contingent liabilities and disclosure
• Contingent assets
• Onerous contracts
• Restructuring provisions
• Review and reversal of provisions
• Reimbursements and presentation
• Decommissioning provisions