5.15 An asset or liability can exist even if the probability of an inflow or outflow of economic benefits is low (see 1. The probability to produce economic benefits is low in Potential to produce economic benefits and 2. Probability of a transfer of economic benefit is low in Transfer of an economic resource).
Magnitude of the possible cash flows Low probability of an inflow or outflow of economic benefits
5.16 If the probability of an inflow or outflow of economic benefits is low, the most relevant information about the asset or liability may be information about the magnitude of the possible inflows or outflows, their possible timing and the factors affecting the probability of their occurrence. The typical location for such information is in the notes.
Providing relevant information may be revealing Low probability of an inflow or outflow of economic benefits
5.17 Even if the probability of an inflow or outflow of economic benefits is low, recognition of the asset or liability may provide relevant information beyond the information described in paragraph 5.16. Whether that is the case may depend on a variety of factors. For example:
- if an asset is acquired or a liability is incurred in an exchange transaction on market terms, its cost generally reflects the probability of an inflow or outflow of economic benefits. Thus, that cost may be relevant information, and is generally readily available. Furthermore, not recognising the asset or liability would result in the recognition of expenses or income at the time of the exchange, which might not be a faithful representation of the transaction (see Board assessment to sustain faithful representation sub (a)).
- if an asset or liability arises from an event that is not an exchange transaction, recognition of the asset or liability typically results in recognition of income or expenses. If there is only a low probability that the asset or liability will result in an inflow or outflow of economic benefits, users of financial statements might not regard the recognition of the asset and income, or the liability and expenses, as providing relevant information.