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A provision is recognised when, and only when, an enterprise has a present obligation
(legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that
an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance
sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of
money is material, the amount of a provision is the present value of the expenditures expected to be
required to settle the obligation.
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