Difference between provision and actual expenses
Question We make some provisions and accruals each year in our financial statements. However, the actual expenses incurred are almost always different from the accrual or a provision made. How should we book the difference between actual expenses and a provision? Should we restate the…
Provision based on a budget or orders
Question Our company operates on budgets and if the budget is not spent during the year, the cash cannot be used in the next year. We have to refund the cash to our parent company and what’s worse the budget for the same item will…
Expenses for remediation of environmental damage
Question We operate a chiller plant through which we provide cooling services to our customers. However the soil around the plant is of poor quality due to a leakage of water from the plant. It caused some underground leaks. We are able to identify the…
When to recognize a warranty provision
Question I do understand that we have to make provision for expenses for warranty repairs if we are obliged to make repairs of defects on the product within 5 years after making a sale. But why do we make a provision for all 5 years…
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