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A contingent asset is a possible asset that may arise because of a gain that is contingent on future events that are not under an entity's control.
Disclosure is enough if it is material as per IFRS 37.
Hi Mary Grace,
Contingent asset is the the asset which may arise in the future as a result of some past event which will be confirmed by some future event.
Other point is that future event is not under the control of the reporting entity.
If the probability of the realization of the asset is more than in that case one should make disclosure in the Financial statements in the notes. If the probability of the realization is remote, then no disclosure is required.
Asset to be booked only when the actual realization happens.
For Example: Company X has filed a suite against another company claiming compensation of CU 1,000,000 for non fulfillment of the contract. Now lets examine the case.
Past Event: Company X has filed a Suit.
On Reporting Date: see the probability whether case will be in favor or not in favor??
If probability of case in favor is high then - Disclosure in the FS by notes.
If probability of case not in favor is high then - No Disclosure - Ignore it.
Future Event will be: The final judgement of the court.
That`s it.
Hope you will like it. If you have further queries then don`t hesitate to ask.
Motashim Badshah.
A contingent asset is a potential asset associated with a contingent gain.
contingent assets and contingent gains are not recorded in accounts, even when they are probable and the amount can be estimated.
IAS - a possible asset that arises from past events, and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent asset should not be recognized - but should be disclosed where an inflow of economic benefits is probable. When the realization of income is virtually certain, then the related asset is not contingent asset and its recognition is appropriate. ingent assets should not be recognised – but should be disclosed where an inflow of economic benefits is probable. When the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.
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