In order that a provision should be recognized in an entity's financial statements, it is necessary that:

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Khawar
06-September-2013

1. The entity has a present obligation2. The entity has a legally enforceable obligation3. The entity has a constructive obligation4. It is possible that an outflow of economic benefits will be required

Financial Accounting Financial Management Financial Systems Implementation

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Date Posted: 2013/08/28

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by Farhan uddin Khilji , Head of Internal Audit , ABV Rock Group Co. Ltd.

The entity has a present obligationan for which outflow of economic benefits will be required.

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by Deleted user

Provision is a liability of uncertain timing or amount. An entity must recognize a provision if, and only if: * a present obligation (legal or constructive) has arisen as a result of a past event (the obligating event), * payment is probable ('more likely than not'), and * the amount can be estimated reliably.

a possible obligation depending on whether some uncertain future event occurs, or a possible obligation depending on whether some uncertain future event occurs, or

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