Which of the following is a criterion for provision recognition according to IAS 37?

Provision recognition under IAS 37, which deals with provisions, contingent liabilities, and contingent assets, requires that certain criteria be met for a provision to be recognized in the financial statements. The correct criterion involves the probability of an outflow of resources that embody economic benefits.

The concept of a "probable outflow of resources" means that there is a realistic expectation that the company will have to part with resources, such as cash, to settle the obligation. This aligns with the standard’s emphasis on a present obligation resulting from past events where the resources are required to settle the obligation, leading to a reliable estimate of the amount required.

In contrast, other options do not adequately represent the key criteria for recognizing a provision. Future events, as referenced in the first option, do not provide a basis for current obligations since the obligation must stem from a past event. Making a reliable estimate of future profit, as suggested in another option, is not necessary for recognizing a provision; instead, it focuses on losses or expenses, which are unrelated to profit estimation. Lastly, a change in market conditions may impact the recognition of provisions but does not directly serve as a recognition criterion.

Thus, the most relevant and correct criterion for provision recognition according to IAS 37 is