AS 4 Contingencies and Events Occurring After The Balance Sheet Date

Professional

Applicability of Accounting Standard AS 4

the following are the few exceptions of AS 4

  • Liabilities of GIC or LIC Which arises from the Insurance Policies Announced.
  • Bonds which arises from a Long Term Lease Contracts.
  • Obligations related to under the retirement benefit Plans.

Definitions:

Contingency:- Happening or not Happening of Future Uncertain events are considered as Contingency.

Events Occurring after the Balance Sheet Date

These are some of the events which are occurred after the balance sheet date and date on which such financial statements are considered and approved by the Board of Directors.

There are two Ways of incidences are identified:-

  • Events that give or arises which subsisted at balance sheet date.
  • Events that are occurred following balance sheet BS Date.

Accounting Treatment of Contingent Losses

The outcome of the Result will lead to the Contingent Losses then the Company treats their Financial Statements as a Loss.
In Case there is insufficient or improper evidence for assessing the value of the Contingent loss then we will disclosure in financial Statements for the Nature and existence of the Contingency. Obligations which might arise from the Discounted bills of Exchange such as Similar Obligations, ..etc.

Accounting Treatment of Contingent Gains

An event which leads to the recognization of the income in the future will lead to Contingent gains. But As per the accounting Principals Anticipate all expenses and loss but not incomes and gains.

Valuation of Amount of Contingency:-

  • The Value of the Amount will be considered into accounts as per the valuation.
  • Event occurs after the balance sheet date will be considered into account if assets are recognized or losses exists in the business.

Events Occurring After the Balance Sheet Date:-

There are many events which are occurred after the balance sheet which are adjusted to the financial statement is briefly explained is given below.
Adjusting Events:- All the Assets and Liabilities are adjusted to the Events that occurred after the Balance Sheet as per the conditions existed at balance sheet date.
Non Adjusting Events:- Adjustments which are not required for assets and liabilities for events which occur after balance sheet date in such events do not exist the conditions of Balance Sheet Date.

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