Question

With regard to reporting of contingent liabilities, U.S. GAAP and International Financial Reporting Standards (IFRS) differ in defining the term "probable". Which of the following is correct with regard to defining "probable"?

Multiple Choice

• Under IFRS, "probable" means the chance of an event occurring is slight.

• Under U.S. GAAP, "probable" means the chance of an event occurring is slight but less than likely.

• Under IFRS, "probable" means an event is more likely than not to occur.

• Under U.S. GAAP, "probable" means an event is more likely than not to occur.

Answer 1

Option C is the correct answer.

As per IAS 37 under IFRS, the word Probable is defined as an event more likely than not to occur.

Where as Probable under US GAAP means likely to occur.

Thank you :)