UK GAAP 2019

Chapter 19Provisions and contingencies

• 1 INTRODUCTION
• 2 COMPARISON BETWEEN SECTION 21 AND IFRS
  • 2.1 Scope – provisions, contingent liabilities and contingent assets covered by another section
  • 2.2 Scope – financial guarantee contracts
  • 2.3 Disclosures
• 3 REQUIREMENTS OF SECTION 21 FOR PROVISIONS AND CONTINGENCIES
  • 3.1 Terms used in Section 21
  • 3.2 Scope
    • 3.2.1 Items outside the scope of Section 21
      • 3.2.1.A Executory contracts, except where the contract is onerous
      • 3.2.1.B Financial instruments
      • 3.2.1.C Insurance contracts
      • 3.2.1.D Areas covered by other sections of FRS 102
      • 3.2.1.E Provisions compared to other liabilities
  • 3.3 Determining when a provision should be recognised
    • 3.3.1 The entity has an obligation at the reporting date as a result of a past event
    • 3.3.2 A transfer of economic benefits is probable
    • 3.3.3 The amount of the obligation can be measured reliably
    • 3.3.4 Cases where recognition of a provision is prohibited
      • 3.3.4.A Future operating losses
      • 3.3.4.B Staff training costs
    • 3.3.5 Examples of provisions in Section 21
      • 3.3.5.A Onerous contracts
      • 3.3.5.B Restructuring provisions
      • 3.3.5.C Warranty provisions
      • 3.3.5.D Refunds policy
      • 3.3.5.E Litigation and other legal costs
      • 3.3.5.F Financial guarantee contracts
  • 3.4 Contingent liabilities
  • 3.5 Contingent assets
  • 3.6 How probability determines whether to recognise or disclose
  • 3.7 Initial measurement
    • 3.7.1 Best estimate of provision
    • 3.7.2 Discounting the estimated cash flows to a present value
      • 3.7.2.A Real or nominal rate
      • 3.7.2.B ...