IAS 37 — Provisions, Contingent Liabilities and Contingent Assets.pdf

Only if all stages are met, can the software programme be capitalised and amortised as an intangible asset. Software internally developed for in-house use is treated differently. Because there is no intention to sell the software it is difficult to demonstrate the generation of future economic benefits to the enterprise. For example, software developed internally for payroll accounting will probably not meet the criteria for recognition. A software programme that facilitates the sales process and enables the sales department to contact customers more easily resulting in additional sales transactions will probably meet all criteria for recognition. 10. IAS 37 – Provisions, Contingent Liabilities and Contingent Assets 10.1. General IAS 37 prescribes the accounting treatment for nearly all of an entity’s liabilities. Only liabilities resulting from financial instruments, from so-called executory contracts, under which neither party has performed any or only partially to an equal extent of its obligations, 145 those arising in insurance entities and those covered by another standard . IAS 37 addresses the recognition of provisions and reporting requirements for contingent assets and liabilities. If the criteria are met, contingent assets and liabilities are not recorded in the balance sheet; only additional information has to be included in the notes section of the financial statements. This facilitates the transition process regarding contingent assets and liabilities because the process consists only of an examination of the reporting requirements and a preparation of a list of additional notes. IAS 37 should be reviewed in connection with IAS