Contingencies and Events Occurring After the Balance Sheet ...

1 81 AccountingStandard(AS)4(revised1995)Cont ingenciesandEventsOccurringAftertheBalan ceSheetDateContentsINTRODUCTIONP aragraphs1-3 Definitions3 EXPLANATION4-9 Contingencies4-7 AccountingTreatmentofContingentLosses5 AccountingTreatmentofContingentGains6 DeterminationoftheAmountsatwhichContinge nciesareincludedinFinancialStatements7 EventsOccurringaftertheBalanceSheetDate8 Disclosure9 ACCOUNTINGSTANDARD10-17 Contingencies10-12 EventsOccurringaftertheBalanceSheetDate1 3-15 Disclosure16-1776AS4(revised1995)Account ingStandard(AS)4*(revised1995)Contingenc ies1andEventsOccurringAftertheBalanceShe etDate(ThisAccountingStandardincludespar agraphs10-17setinbolditalictypeandparagr aphs1-9setinplaintype, )ThefollowingisthetextoftherevisedAccoun tingStandard(AS)4, ContingenciesandEventsOccurringAftertheB alanceSheetDate , * ,Provisions,ContingentLiabilitiesandCont ingentAssets,becomingmandatoryinrespecto faccountingperiodscommencingonorafter1-4 -2004,allparagraphsofthisStandardthatdea lwithcontingencies( (a),2, ,4( ),5( ),6,7( ), (relevantportion), ,10,11, 12 and 16) stand withdrawn except to the extent they deal with impairment ,impairmentofreceivables(commonlyreferre dtoastheprovisionforbadanddoubtfuldebts) ,wouldcontinuetobecoveredbyAS4.

2 (SeeAnnouncementon ApplicabilityofAS4toimpairmentofassetsno tcoveredbypresentIndianAccountingStandar ds (publishedin TheCharteredAccountant ,April2004, )).ThisAnnouncementisreproducedunderthes ectiontitled AnnouncementsoftheCouncilregardingstatus ofvariousdocumentsissuedbytheInstituteof CharteredAccountantsofIndia , AnnouncementsoftheCouncilregardingstatus ofvariousdocumentsissuedbytheInstituteof CharteredAccountantsofIndia appearingatthebeginningofthisCompendiumf or ,AccountingStandard4asoriginallyissuedin November1982(andsubsequentlymademandator y) (a)contingencies4,and(b) ,whichmayresultincontingencies,areexclud edfromthescopeofthisStatementinviewofspe cialconsiderationsapplicabletothem:(a)li abilitiesoflifeassuranceandgeneralinsura nceenterprisesarisingfrompoliciesissued; (b)obligationsunderretirementbenefitplan s;and(c) ,theultimateoutcomeofwhich,gainorloss,wi llbeknownordeterminedonlyontheoccurrence ,ornon-occurrence, ,bothfavourableandunfavourable,thatoccur betweenthebalancesheetdateandthedateonwh ichthefinancialstatementsareapprovedbyth eBoardofDirectorsinthecaseofacompany,and , (revised1995)(a)thosewhichprovidefurther evidenceofconditionsthatexistedatthebala ncesheetdate;and(b)those which are indicative of conditions that arose subsequent Contingencies usedinthisStatementisrestrictedtoconditi onsorsituationsatthebalancesheetdate, ,however, ,ofitself, ,thefactthatestimatesofusefullifeareused todeterminedepreciation,doesnotmakedepre ciationacontingency.

3 , ,eventhoughtheamountsmayhavebeenestimate d, ,butinmostcircumstances, ,therefore, ,supplementedbyexperienceofsimilartransa ctionsand,insomecases, , , , ,obligationsarisingfromdiscountedbillsof exchangeandsimilarobligationsundertakenb yanenterprisearegenerallydisclosedinfina ncialstatementsbywayofnote,eventhoughthe possibilitythatalosstotheenterprisewillo ccur, ,whentherealisationofagainisvirtuallycer tain, (revised1995) ,orthataliabilitymayhaveexisted,atthebal ancesheetdateare,therefore, ,eachcontingencycanbeseparatelyidentifie d, may represent sucha the factors taken intoaccount by managementinevaluatingsuchacontingencyar etheprogressoftheclaimatthedateonwhichth efinancialstatementsareapproved,theopini ons,wherever necessary, of legal experts or other advisers, the experience of ,thentheamountofthecontingencyneednotbei ndividuallydetermined, , , , value of investments between the Balance Sheet date and the date , to enable users of financial statements to make proper ,althoughtheytakeplaceafterthebalanceshe etdate, ,orunusualchangesaffectingtheexistenceor substratumoftheenterpriseafterthebalance sheetdate( ,destructionofa major production plant bya fire After the Balance Sheet date ) may (revised1995)

4 ,itsnatureandanestimateofitsfinancialeff ectaregenerallydisclosedbywayofnoteunles sthepossibilityofalossisremote( ). Ifa reliable estimate of the financial effect cannot be made, this fact , :(a)itisprobablethatfutureeventswillconf irmthat,aftertakingintoaccountanyrelated probablerecovery,anassethasbeenimpairedo raliabilityhasbeenincurredasatthebalance sheetdate,and(b) , ( ,thecontinuanceofexistenceorsubstratumof theenterprise) ,whichareproposedordeclaredbytheenterpri seafterthebalancesheetdatebutbeforeappro valofthefinancialstatements, ,thefollowinginformationshouldbeprovided :(a)thenatureofthecontingency;(b)theunce rtaintieswhichmayaffectthefutureoutcome; (c)anestimateofthefinancialeffect, ,thefollowinginformationshouldbeprovided :(a)thenatureoftheevent;(b)anestimateoft hefinancialeffect,orastatementthatsuchan estimatecannotbemade.