A contingent asset is defined as a possible asset arising from past events which will only be confirmed by uncertain future events not wholly within the entity's control.

• A. A certain asset recognised in the balance sheet.
• B. A possible asset arising from past events confirmed by certain future events.
• C. A possible asset arising from past events which will only be confirmed by uncertain future events not wholly within the entity's control.
• D. An asset that is never recognised.

Answer: (C)

Contingent assets are potential inflows that depend on uncertain future events outside the entity’s control. The statement that best fits this idea describes a possible asset arising from past events, whose existence will be confirmed only by uncertain future events not wholly within the entity’s control. This captures both the origin (past events) and the condition (uncertain events outside the entity’s control) that prevents recognizing the asset in the balance sheet.

In IFRS practice, such assets are not recognized until the inflow becomes virtually certain; instead, they may be disclosed when the inflow is probable. The other descriptions don’t fit because they refer to a certain asset that would be recognized, or to future events that are certain (which would remove the contingency), or to an asset that is “never recognized” in a way that ignores the permissible disclosure of contingencies.