IRD,AFR & Provision Flashcards
CHAPTER 8
1
Q
Criteria to be met to recognise provision
A
1) Present obligation from a past event
2) Reliable estimate
3) Probable outflow
2
Q
2 types of present obligation for provision
A
1) Constructive
2) Legal
3
Q
Legal obligation (provision)
A
Enforced by law
Etc : contract
4
Q
Constructive obligation (provision)
A
Business set up an expectation that they will make payment
Accepted specific responsibilities and created a reasonable expectation for other parties to receive compensation
