What is a conditional asset?
Conditional assets are any types of assets that have the potential to bring some type of economic benefit due to circumstances outside the owner's control. Given that the owner does not have a way to project future events that can trigger these unknown benefits, the conditional asset is not taken into account in the balance sheet of the company. The asset is included in the notes on the financial statements issued by the company, allowing its existence and to provide a framework for reporting a conditional asset in the balance sheet, if and when it begins to bring a kind of tangible benefits.
In many situations, conditional assets are a certain type of claim related to past events that may or may eventually bring some measurable return. For example, the settlement from the ongoing court represents the potential for generating a return if and when the action is settled to the company's satisfaction. Although society is very sure how the suit will be, this expected return remains a contingent until the judge has made KONThe decision and award was granted by a court. At this point, the quantity of the judgment can be entered as a profit and taken into account in the balance sheet of records of the Company's accounting records.
The conditional asset is not attributed in the same way as the conditional responsibility or loss. Using the same example of the action, the defendant company organizes books to allow the worst scenario that loses the action and must pay the plaintiffs any amount granted by the court. In many situations, the potential loss is recorded in the balance sheet until the result of the action. If there is no sufficient data to provide a reasonable estimate of conditional loss, then the defendant still provides the best estimate and charges for it in the company's financial statements.
The idea that stands for the purpose of a conditional assets is to provide an honorary and complete rendering of the financial situation of the company and at the same time to avoid the perspective that the benefits are already for PDiscontinued. This can be useful for several purposes, including public relations with consumers and inspiring trust among potential investors. This process also facilitates full incorporation of benefits into accounting records and reflects these benefits in the balance sheet if the conditional asset eventually provided real and tangible benefits.