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9.8 Reimbursement and contingent assets
Publication date: 30 Nov 2022
us IFRS & US GAAP guide
Guidance varies with respect to when these amounts should be recognized. As such, recognition timing differences could rise.
US GAAP
| IFRS
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Recovery of recognized losses—An asset relating to the recovery of a recognized loss shall be recognized when realization of the claim for recovery is deemed probable.
Recoveries representing gain contingencies—Gain contingencies should not be recognized prior to their realization. In certain situations a gain contingency may be considered realized or realizable prior to the receipt of cash.
| Reimbursements—Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The amount recognized for the reimbursement shall be treated as a separate asset and shall not exceed the amount of the provision.
The virtually certain threshold may, in certain situations, be achieved in advance of the receipt of cash.
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Contingent assets—Contingent assets are not recognized in financial statements because this may result in the recognition of income that may never be realized. If the inflow of economic benefits is probable, the entity should disclose a description of the contingent asset. However, when the realization of income is virtually certain, then the related asset is not a contingent asset, and its recognition is appropriate.
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