CAT / FIA FFA Syllabus D. Recording Transactions And Events - Contingent asset. - Notes ^{3 / 3}

Contingent assets are possible assets that arise from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the entity.

A contingent asset must not be recognized. Only when the realization of the related economic benefits is virtually certain should recognition take place. At that point, the asset is no longer a contingent asset!

Contingent assets must only be disclosed in the notes if they are probable.  A brief description of the contingent asset must be provided together with an estimate of its financial effect and details of any uncertainties

Disclosure Note

Where an inflow of economic benefits is probable (contingent asset), an entity should disclose a brief description of the nature of the contingent assets at the end of the reporting period and, where practicable, an estimate of their financial effect.