How well do you understand contingent liabilities?
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Questions and Answers

What is the definition of a contingent liability according to NZ IAS 37 Para 22?

  • A present obligation that arises from past events but does not meet recognition criteria
  • A possible obligation that arises from future events
  • A present obligation that arises from future events
  • A possible obligation that arises from past events (correct)

    • Which of the following is not a characteristic of a contingent liability?

  • Existence confirmed by uncertain future events
  • Arising from past events
  • Possible obligation
  • Arising from future events (correct)

    • What is the difference between a contingent liability and a present obligation that does not meet recognition criteria?

  • Contingent liability arises from future events while present obligation arises from past events
  • Contingent liability is probable while present obligation is not
  • Contingent liability meets recognition criteria while present obligation does not
  • Contingent liability arises from past events while present obligation does not meet recognition criteria (correct)

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