ICAB PL Financial Accounting & Reporting Practice Questions - ICAB CA Professional Level Financial Accounting And Reporting (Bangladesh) Exam

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Under the IASB Conceptual Framework, which condition is essential for an entity to have a 'present obligation' that gives rise to a liability?

The entity has no practical ability to avoid the transfer of an economic resource, and the obligation has arisen from past events The counterparty must have already initiated formal legal proceedings against the entity The exact amount and timing of the cash outflow must be known with mathematical certainty The obligation must be legally enforceable in a court of law with signed documentation

Correct Answer:

The entity has no practical ability to avoid the transfer of an economic resource, and the obligation has arisen from past events

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