Contingent Assets. [Dec. 2021, 1 Mark]
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Theoretical FrameworkQ-2 | Contingent Assets and Contingent LiabilitiesQuestion 4970 of 110
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Detailed Solution & Explanation
Contingent Assets:
A contingent asset is a possible asset that arises from past events the existence of
which will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the enterprise.
An example is a claim that an enterprise is pursuing through legal processes, where
the outcome is uncertain.
An enterprise should not recognise a contingent asset.
However; when the realisation of income is virtually certain, then the related asset
is not a contingent asset and its recognition is appropriate.
A contingent asset is not disclosed in the financial statements.
It is usually disclosed in the report of the approving authority (Board of Directors in
the case of a company, and, the corresponding approving authority in the case of any
other enterprise), where an inflow of economic benefits is probable.
About This Chapter: Theoretical Framework
Paper
Paper 1: Accounting
Weightage
5-10%
Key Topics
Policies, Standards (Ind AS), Vocabulary
This chapter covers Policies, Standards (Ind AS), Vocabulary and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 5-10% weightage. Focus on understanding core concepts rather than memorizing.
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