IAS 37 stipulates the criteria for provisions, contingent liabilities and contingent assets which must be met in order for a provision to be recognised, so that companies should be prevented from manipulating profits. Required:

(i) Explain the criteria stipulated in IAS 37 Provisions, contingent liabilities and contingent assets, with appropriate examples.

(10 marks)

(ii) Explain the issues that may arise with regard to provisions. (5 marks)