The Term "Provision" as It Is Used in IAS 37

question 40

Multiple Choice

The term "provision" as it is used in IAS 37, is most closely related to what term in U.S. GAAP?

• A) Contingent liability, where the outflow of resources is "remote."
• B) Contingent liability, where the outflow of resources is "probable."
• C) Current liability, where the outflow is difficult to measure.
• D) Reserve for bad debt, where the amount recoverable is "uncertain."

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Definitions:

Equity Method

An accounting technique used for recording investments in which the investor has significant influence over the investee, but not full control.

Straight Line Amortization

A method of allocation of an asset's cost over its useful life in equal annual amounts.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Non-Controlling Interest

A stake in a company that is not large enough to control company decisions, representing ownership by minority shareholders in a subsidiary not wholly owned by the parent.