Jack Limited, a newly formed company has requested you as a financial consultant for advice on how to account for provisions, contingent liabilities and contingent assets. The companys year-end is 31 December.

REQUIRED The financial controller of Jack Limited has asked you to prepare a brief report which addresses the following:

In accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets, discuss the recognition criteria for the following:

(i) A provision

(ii) A contingent liability

(iii) A contingent asset