Some Provisions Traditionally Recorded by Entities May Not Be Considered

question 57

Multiple Choice

Some provisions traditionally recorded by entities may not be considered liabilities under the AASB Framework because:

• A) Their amounts are not considered probable.
• B) They do not involve a future sacrifice of economic benefits.
• C) The identity of the external party to whom the present obligation is owed is unknown.
• D) There is no entity other than the reporting entity involved in the present obligation as a result of past transactions or other past events.
• E) None of the given answers.

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Definitions:

Unrealized Gain/Loss

Gains or losses on investments that the company holds but has not yet sold, and thus they have not realized the gains or losses.

Fair Value

An estimated market price of an asset or liability, reflecting the value for which it could be exchanged or settled between knowledgeable, willing parties.

Bond Investment

Buying bonds as a way to generate income through interest payments, representing a loan from the investor to the issuer.

Market Yield

The annual income return on an investment, expressed as a percentage of the market price.