Professional Documents
Culture Documents
Provisions
Provisions
CONTINGENT LIABILITIES
Provisions
● IAS 37 defines provision as liabilities of
entities the timing or amounts of which is
uncertain.
● It is recognized as financial liability
because it has both the criteria for
recognition which is probable outflow of
economic benefits and is measurable.
Examples of provision
● Warranties
● Environmental contamination
● Decommissioning or abandonment costs
● Court case
● Guarantee
Measurement of Provisions
● In IAS 37 states that the amount to be
recognized for the present obligation of
the entity is the reliable estimate at the
end of the accounting period required in
the settlement of the obligation.
Other measurement considerations: