A contingent asset that is almost certain should be recognised.

• A. Recognise
• B. Disclose in notes
• C. Ignore
• D. Recognise as revenue

Answer: (A)

Contingent assets are potential inflows that depend on uncertain future events. Under IFRS, such assets aren’t recognised until the inflow is virtually certain. When that point is reached, the contingency disappears and the asset should be recognised in the financial statements. This reflects that an economic benefit is now highly probable and exists in substance, so recording it as an asset gives a faithful view of the entity’s financial position. It isn’t recognised as revenue because revenue comes from ordinary activities and the timing of recognition follows different criteria; the correct step is to recognise the asset itself.