iGAAP Alert: January 2010
Measurement of Liabilities in IAS 37
In order to finalise the new standard to replace IAS 37 the IASB has issued a limited exposure draft on the measurement requirement.
It is proposed that a non-financial liability would be measured at the amount that the entity would rationally pay to be relieved of the obligation. That will be lowest of the amounts to fulfil, to cancel, or to transfer to obligation.
The uncertainty expected cash outflows would be reflected in the measurement of the obligation. The entity would estimate the liability using a probability - weighted average of the expected outflows and incorporate a risk adjustment to reflect that the outflows might differ from those expected.
For more information, read our iGAAP Alert: January 2010.