"It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision-making." ~ Alan GreenspanIAS 37 is the international accounting standard that deals with contingent assets and liabilities. The vague language in IAS 37 leads to inconsistencies in the evaluation by investors in the review and analysis of financial statements.
- Contingent liability by using a "best estimate" of the outlay used to settle the obligation can have several interpretations and outcomes.
- Doesn't specify costs to include in the measurement of a liability and may include:
- Include only direct costs
- May factor in incremental costs
- Others may add indirect costs and overhead fees
- Market pricing of current work
- Replace "best estimate" of a liability with the amount you would rationally pay at the reporting period to relieve the obligation.
- Obligation to settle a legal dispute, the expected cash payments plus associated costs such as legal fees.
- Shutting down a factory utilize service provider's estimate to retain objectivity.
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