alleryStart learning →Which abuse of provisions did IAS 37 help to minimise?
AChannel stuffing
BBig bath accounting
CRound tripping
DBill and hold sales
Answer & Solution
Correct answer: B. Big bath accounting
By regulating when a provision may be recognized, the standard limited its use to smooth or shift earnings, as in big baths.
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Related questions
A write-down of inventory in a big bath has what impact on cash?Taking one large one-time charge to lower future expenses is known as what?Recognizing an ARO raises both assets and liabilities. What happens to the debt-to-equity A $40,275.96 cost due in 40 years is discounted at 9%. The present value is about what?Tanks costing $15,000 to remove today rise 2.5% a year for 40 years. The future cost is abUnder IAS 37, when an ARO discount rate changes, the present value is recalculated and whaWhen an ARO is first recognized, an asset equal to the initial liability is what?An ARO liability is initially measured at the present value of what?