Hi, out of the below
Warranties
Legal
Environmental
Decommissioning
Bad debt
out of the above, a debit to asset or P&L is given to create a provision, is there any possibility for me to create a provision out of retained earning earnings or reserves?
Eg. I have a sinking fund, and recently someone me filed a lawsuit on me for contaminating his fields. I’m gonna loose the case.
Sinking fund reserve/ retained earnings a/c
To Provision liability
and when I have to paid money to the farmer
Provision Liability a/c
To Bank a/c
What difference would it make? Is Provision an allowable expense?
Txs
CAclubindia
