B.com ACA
5923 Points
Joined December 2011
As per AS-4, A present obligation(not a certain liability, you can say as immature liability) is aobligation the existence of which at the balance sheet date is considered as probabl(more likely than not)e. An obligation is recognised as provision only the 3 conditions are satisfied:
(i) there is a present obligation as a result of a past event;
(ii) it is probable(more likely than not i.e 50% approx) that an outflow of #resources embodying economic benefits(#-means assets of the co.) will be required to settle the obligation; and
(iii) a reliable estimate can be made of the amount of the obligation.
The opposite of Prseent opbligation is possible obligation whose exisetnce is not probable at B/s date.