Hi Friends,
When and for what items, Provision needs to be created in books og Account?
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Provision
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| Originally posted by : Kavitha | ||
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Hi Friends, When and for what items, Provision (liability whose occurance is still probable and amount is uncertain, but having high probability) needs to be created in books og Account? |
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Chances of Payment
0% - 5% = No Treatment
5% - 50% = Contingent Liability (Foot Note)
50% - 99% = Provision in Balance Sheet
99% - 100% = Current Liability in Balance Sheet
(Eg. of Provisions: Provision for legal charges, taxation, expected losses etc.)
The provision to be made in end of year closings expect some cases. The provision to be made on for example debtors, dividents and payable to government related activity.
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