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Summary of ICDS - X - Porvisions,contingent liabilities and contingent assets - issued by CBDT
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....ummary of ICDS - X - Porvisions,contingent liabilities and contingent assets - issued by CBDT <br>News and Press Release<br>Dated:- 11-4-2015<br><BR>Issued by CBDT under power under section 145(2) of Income Tax Act, 1961 vide notification no. 32/2015, dated 31-3-2015 Purpose: Computation of Income under PGBP head and Income from Other sources head Applicability: All assessee following mercantile....
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.... accounting system W.e.f. 01/04/2015 i.e. Assessment year 2016-17 ICDS - X - Provisions, contingent liabilities and contingent assets S. No. Scope of ICDS Particulars X Provisions, contingent liabilities and contingent assets 1. Scope - Deals with Provisions, contingent liabilities & contingent assets 2. Out of scope - resulting from financial instruments & executor contracts, in Insuranc....
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....e business from contracts with policyholder and covered in any other ICDS 3. Terms used - Provision: A liability which can be measured only by substantial degree of estimation, Liability: Present obligation from past events, resulting in an outflow, Obligating event: An obligation which have no realistic alternative to settlement, Executory contracts: In which neither part performed any its oblig....
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....ation or not performed to equal extent , Present obligation: Based on the evidence available , its existence is reasonably certain. 3.1 Contingent liability: a possible obligation from past events which confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within control of the person OR a present obligation from past events but not recognised becaus....
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....e it is not reasonably certain that outflow will be required or a reliable estimate of obligation cannot be made 3.2 Contingent Assets: A possible assets from past events, the existence of which confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within control of the person. 4. Recognition of Provisions - a) Present obligation as a result of past eve....
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....nts AND b) Reasonably certain of outflow obligation AND c) a reliable estimate of obligation can be made. All 3 conditions need to be met. No provision for cost need to be incurred to operate in future. Only on enactment of legislation obligation arises. 5. Recognition of Contingent Liabilities - No recognition. 6. Recognition of Contingent Assets - No recognition, on reasonable certain that inf....
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....low of economic benefit will arise, assets and related income will be recognised. 7. Measurement - Amount recognised as a provision shall be best estimate of the expenditure. Provision shall not be discounted to its present value, Amount recognised as asset and related income shall be best estimate of value of economic benefits. Amount and related income shall not to be discounted. 8. Reimbursem....
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....ent - In case of some expenditure expected to be reimbursed by another party, they will be recognised when its reasonably certain that it will received but it will be limited to the value of provision. 9. In case of jointly and severally liable obligation, it will be treated contingent liability to the extent that is expected to be settled by other parties. 10. Review - At the end of each previo....
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....us year, adjust to reflect the current best estimate. In case of no reasonably certain that outflow will arise, provision OR an asset and related income need to be reversed. 11. Use of Provisions - Only for those expenditures for which provision was originally recognised. 12. Disclosures - In respect of each class of provision - Brief description of the nature of obligation, carrying amount , ad....
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....ditional provisions made during the year , amount used that is incurred and charged during the year , unused amount reversed , amount of any expected reimbursement with amount of asset recognised for that reimbursement In respect of each class of asset and related income - Brief description of the nature of obligation, carrying amount, additional amount of asset and related income recognised duri....
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....ng the year including increase to assets and related income already recognised, Amount of asset and related income reversed during the year.<BR> News - Press release - PIB....