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Contingent liability and provision

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Querist : Anonymous

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Querist : Anonymous (Querist)
22 August 2013 Hi, what is the meaning of present obligation and possible obligation in relation with contingent liability and provision?
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CS,CA F,Numrologi TusharSampat

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CS,CA F,Numrologi TusharSampat (Expert)
22 August 2013 Present obligation means liability to be paid today due to your business action in past.
eg if you purchased good on credit on 31.3.2013 but did not paid then till you pay it, it will be your present obligation.

Possible obligation means in future you may have to pay for a certain liability due to your business action taken today..
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Ganeshbabu K

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Ganeshbabu K (Expert)
22 August 2013 an obligation is a present obligation if based on evidence available , its existance on the balancesheet date is considered probable,,i.e, more likely than not
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