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SFAS No.
9 Contingencies and Subsequent Events |
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 Status |
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Issued by
the Financial Accounting Standards Committee in Taiwan on
December 31, 1986 |
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Summary |
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The purpose of this Statement is to
establish accounting standards for contingencies |
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and subsequent events. |
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Loss Contingencies (Recognition)
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A loss should be recognized if both
the following conditions of a loss contingency are |
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met: |
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(a) from
the circumstances, it is probable that an asset has been impaired or
a liability
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has been
incurred by the date of the financial statements; and
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(b) the
amount of loss, after deducting compensation for damage, can be
reasonably
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estimated.
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Loss Contingencies (Disclosure)
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If one of the following conditions for a loss
contingency is met, the nature of the
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contingency and the estimated amount or range of the
loss should be disclosed in the
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footnotes to the financial statements, if a
reasonable estimate of the amount is not possible,
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disclosure should be made to describe the fact that
no estimated amount is determinable: |
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(a) from
the circumstance, it is probable that an asset has been impaired or
a liability
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has
been incurred by the date of the financial statements; but the
amount of loss
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cannot
be reasonably estimated;
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(b) from
the circumstances of related events, it is reasonably possible that
an asset
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had
been impaired or a liability had been incurred at the date of the
financial |
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statements.
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Loss Contingencies (Optional
Disclosure) |
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If circumstances are remote that an
asset has been impaired or a liability has been
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incurred at the date of the financial
statements, disclosure in the financial statements
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can be made to describe the existence
and nature of the loss contingency and an
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estimate of the possible loss or range
of loss. |
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Gain Contingencies (Disclosure)
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Irrespective of whether the gains of
contingencies can be reasonably estimated, if it is
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probable that such gains will be
realized, then disclosure should be made in the notes to |
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the financial statements, but care
shall be exercised to avoid misleading implications of
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its realization. |
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Gain Contingencies (Optional
Disclosure)
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If the gain is possible, disclosure
could be made in the notes to the financial |
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statements, but care shall be
exercised to avoid misleading implications as to the |
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likelihood of realization.
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Gain Contingencies (Non
Disclosure)
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If the gain is remote, it should not
be disclosed in the notes to financial statements.
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Adjusting Subsequent Events
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If subsequent events can provide
additional definite evidence with respect to conditions
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that existed on the balance sheet date
and affect the financial position of the business,
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or indicate that it is not appropriate
for companies to continue the going-concern
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assumption, then adjusting entries to
related assets and liabilities should be made.
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Non-Adjusting Subsequent Events
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Subsequent events may have no impact
on the condition of assets or liabilities that
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existed on the balance sheet date, but
indicate significant changes between the
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balance sheet date and the issuance
date or possible significant changes in operations.
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The disclosure of their nature in the
financial statements is required if these events
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affect valuation and decisions being
made by readers of the financial statements. If the
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subsequent events have a financial
effect on the business, an estimate as to the effect
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or a statement that an estimate cannot
be made should be disclosed.
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Effective
date
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This statement becomes effective for
financial statements for the fiscal year ending
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after December 31, 1986.
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