Liabilities Which Do Not Meet the Recognition Criteria and Where

question 25

Multiple Choice

Liabilities which do not meet the recognition criteria and where the possibility of an outflow of economic resources is remote should:

• A) be recognised as an accrual.
• B) be recognised as a provision.
• C) be recognised as a contingent liability.
• D) not be recognised in the financial statement at all.

---

Definitions:

Parent and Subsidiary

A parent and subsidiary relationship exists when one company, the parent, owns more than half of another company, the subsidiary, granting control and often integrating operations or management.

Consolidated Financial Statements

Consolidated financial statements aggregate the financial information of a parent company and its subsidiaries, presenting it as if the group were a single entity.

Controlling Influence

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Interest Revenue

Income earned from lending money or investing in interest-bearing financial instruments.