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X - Provisions contingent liabilities and contingent assets (w.e.f. AY 2017-18)

ICDS - 10 - Rule - Income computation and disclosure standards - w.e.f. AY 2017-18 - Other Direct Tax / Income Tax - ICDS - 10 - J. Income Computation and Disclosure Standard X relating to provisions, contingent liabilities and contingent assets (Vide notification no. 87/2016 dated 29-9-2016 w.e.f. Assessment Year 2017-18) Preamble This Income Computation and Disclosure Standard is applicable for computation of income chargeable under the head "Profits and gains of business or profession&qu .....

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ting from executory contracts; (c) arising in insurance business from contracts with policyholders; and (d) covered by another Income Computation and Disclosure Standard. 2. This Income Computation and Disclosure Standard does not deal with the recognition of revenue which is dealt with by Income Computation and Disclosure Standard - Revenue Recognition. 3. The term 'provision' is also used in the context of items such as depreciation, impairment of assets and doubtful debts which are ad .....

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utflow from the person of resources embodying economic benefits. (c) "Obligating event" is an event that creates an obligation that results in a person having no realistic alternative to settling that obligation. (d) "Contingent liability" is: (i) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the person; or (ii) a pr .....

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thin the control of the person. (f) "Executory contracts" are contracts under which neither party has performed any of its obligations or both parties have partially performed their obligations to an equal extent. (g) "Present obligation" is an obligation if, based on the evidence available, its existence at the end of the previous year is considered reasonably certain. 4(2) Words and expressions used and not defined in this Income Computation and Disclosure Standard but defi .....

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l be recognised for costs that need to be incurred to operate in the future. 7. It is only those obligations arising from past events existing independently of a person's future actions, that is the future conduct of its business, that are recognised as provisions 8. Where details of a proposed new law have yet to be finalised, an obligation arises only when the legislation is enacted. Contingent Liabilities 9. A person shall not recognise a contingent liability. Contingent Assets 10. A pers .....

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ted to its present value. 13. The amount recognised as asset and related income shall be the best estimate of the value of economic benefit arising at the end of the previous year. The amount and related income shall not be discounted to its present value. Reimbursements 14. Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when it is reasonably certain that reimbursement will be received if th .....

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f each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision should be reversed. 18. An asset and related income recognised as provided in para 11 shall be reviewed at the end of each previous year and adjusted to reflect the current best estimate. If it is no longer reasonably certain that an inflow of economic benefits will arise, th .....

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