PAS 37

Terms and Definitions from PAS 37.pdf

Provision - A liability of uncertain timing or amount.

Contingent Liability - A possible obligation whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Contingent Asset - A possible asset whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Present Obligation - A legal or constructive obligation that arises from a past event.

Obligating Event - A past event that creates a present obligation.

Constructive Obligation - An obligation that arises from an entity's actions, whether written or oral, that lead another party to reasonably believe that the entity will act in a particular way.

Probable Outflow of Resources Embodying Economic Benefits - An outflow of resources that is more likely than not to occur.

Reliable Estimate of the Obligation - An estimate that is sufficiently accurate to allow for a reasonable assessment of the amount of the obligation.

Expected Value - The probability-weighted average of all possible outcomes.

Best Estimate - The most likely amount to be required to settle the obligation.

Mid-Point - The average of the range of possible outcomes.

Risk Adjustment Factor - An adjustment to the estimate of a provision to reflect the uncertainty inherent in the estimate.

Discount Rate - The pre-tax rate used to discount the estimate of a provision to its present value.

Reimbursement Asset - An asset that is recognized when it is virtually certain that an entity will be reimbursed for the settlement amount of a provision.

Onerous Contract - A contract in which the costs of fulfilling the contract exceed the economic benefits expected to be derived from the contract.

Restructuring - A program that is planned and controlled by management, and materially changes either the scope of a business undertaken by an entity or the manner in which that business is conducted.

Binding Sale Agreement - A legally enforceable agreement to sell an operation.

Detailed Formal Plan - A plan that sets out the specific steps that will be taken to restructure an operation.

Direct Costs - Costs that are directly related to the restructuring and are not related to the ongoing activities of the entity.

Reconciliation - A statement that shows the beginning balance, additions, deductions, and ending balance of a provision.

Comparative Information - Information that is presented for the current period and one or more prior periods.

Nature - The type of provision.

Timing - The expected date of settlement of the provision.

Uncertainties - The factors that make it difficult to estimate the amount of the provision.

Assumptions - The assumptions that have been made in estimating the amount of the provision.

Reimbursement - The amount that the entity expects to be reimbursed for the settlement amount of the provision.

Quasi-Contract - An obligation that arises from a situation where there is no formal contract but where the law implies a contract.

Established Pattern of Past Practice - A pattern of behavior that has been established over time.

Expected Value - The probability-weighted average of all possible outcomes.

Mid-Point Amount - The average of the range of possible outcomes.

Discounting - The process of reducing the estimate of a provision to its present value.

Unwinding of Discount - The increase in the carrying amount of a provision that results from the passage of time.

Change in Discount Rate - A change in the pre-tax rate used to discount the estimate of a provision to its present value.

Capitalized - Added to the cost of an asset.

Prospectively - Accounting for changes in provisions by accruing an additional amount or by reversing a previously recognized amount.

Impairment - A reduction in the value of an asset.

Least Net Cost of Exiting from the Contract - The lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfill the contract.

Sale of Operation - The disposal of a business or a part of a business.

Closure - The termination of an operation.

Reorganization - A fundamental change in the structure or operations of an entity.

Retraining - The process of providing training to employees to help them adapt to changes in the workplace.

Relocating - The process of moving employees to a new location.

Marketing - The process of promoting products or services.

Investment in New Systems and Distribution Networks - The purchase of new equipment or systems or the development of new distribution channels.

Board Decision - A decision made by the board of directors of an entity.

Detailed Plan - A plan that sets out the specific steps that will be taken to implement a restructuring.

Announced - Made public.

Affected - Those who will be impacted by the restructuring.

Direct Costs - Costs that are directly related to the restructuring.

Ongoing Activities - The normal operations of an entity.

Future Conduct of Its Business - The way in which an entity expects to operate in the future.

Class of Provision - A group of provisions that have similar characteristics.

Description - A written explanation of something.

Nature - The type of provision.

Timing - The expected date of settlement of the provision.

Uncertainties - The factors that make it difficult to estimate the amount of the provision.

Assumptions - The assumptions that have been made in estimating the amount of the provision.

Reimbursement - The amount that the entity expects to be reimbursed for the settlement amount of the provision.

Source of Constructive Obligation - A factor that creates a constructive obligation.

Entity's Best Estimate - The most likely amount to be required to settle the obligation.

Expected Value of the Settlement Amount - The probability-weighted average of all possible outcomes.

Mid-point Amount of a Range of Estimates - The average of the range of possible outcomes.

Probability Weighted Average - The expected value of a variable, calculated by weighting each possible outcome by its probability of occurrence.

Risk Adjustment Factor - An adjustment to the estimate of a provision to reflect the uncertainty inherent in the estimate.

Pre-tax Discount Rate - The rate used to discount the estimate of a provision to its present value, before taking into account income tax.

Present Value - The value today of a future cash flow, discounted at a specified rate.

Unwinding of the Discount - The increase in the carrying amount of a provision that results from the passage of time.

Effect of a Change in the Discount Rate - The impact of a change in the pre-tax rate used to discount the estimate of a provision to its present value.

Charged Against the Provision - Used to settle the obligation that the provision was intended to cover.

Reversed - Removed from the financial statements.

Additional Provisions Recognized - New provisions that are recognized during the period.

Beginning Balance - The balance of the provision at the beginning of the period.

Ending Balance - The balance of the provision at the end of the period.

Comparative Information - Information that is presented for the current period and one or more prior periods.

Brief Description - A short written explanation of something.

Nature - The type of provision.

Timing - The expected date of settlement of the provision.

Uncertainties - The factors that make it difficult to estimate the amount of the provision.

Assumptions - The assumptions that have been made in estimating the amount of the provision.

Reimbursement - The amount that the entity expects to be reimbursed for the settlement amount of the provision.

Multiple Choice - A type of question that requires the respondent to choose the best answer from a list of options.