Under IAS 37, How Are Contingent Liabilities Treated in the Financial

question 42

Multiple Choice

Under IAS 37, how are contingent liabilities treated in the financial statements?

• A) IAS 37 does not address contingent liabilities.
• B) They are recorded as current liabilities if the amount is reasonably measured.
• C) They are disclosed in the notes to the financial statements when there is more than a remote possibility of an outflow of resources.
• D) They are not disclosed.

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Definitions:

Heat Exchanger

A device used to transfer heat between two or more fluids, gases, or solids of different temperatures without mixing them.

Condenser

An electrical charge storage device also known as a capacitor. In an A/C circuit, it is a heat exchanger located in the vehicle airflow and subject to the ram air. Cooling of the refrigerant causes it to condense to a liquid state. This results in the refrigerant changing to a liquid state.

Thermodynamics

A branch of physics that deals with the behavior of heat; its principles are used to explain the operation of heat exchangers and A/C operation.

Behavior of Heat

The study of how heat energy transfers between materials or systems and its effects.