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IAS 37 establishes the definition of a provision as a "liability of uncertain timing or amount", and requires that all the following conditions be fulfilled before a provision can be recognized: the entity currently has a liability as a result of a past event; an outflow of resources is likely to be needed to settle the liability; and
The recording of the liability in the entity's balance sheet is matched to an appropriate expense account on the entity's income statement. In U.S. Generally Accepted Accounting Principles (U.S. GAAP), a provision is an expense. Thus, "Provision for Income Taxes" is an expense in U.S. GAAP but a liability in IFRS.
The accounting equation relates assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity. The accounting equation is the mathematical structure of the balance sheet. Probably the most accepted accounting definition of liability is the one used by the International Accounting Standards Board (IASB). The following is a ...
Whilst the standard on provisions, IAS 37, prohibits the recognition of a provision for contingent liabilities, [23] this prohibition is not applicable to the accounting for contingent liabilities in a business combination. In that case the acquirer shall recognise a contingent liability even if it is not probable that an outflow of resources ...
The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities. [4] Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
The duty to warn arises in product liability cases, as manufacturers can be held liable for injuries caused by their products if the product causes an injury to a consumer and the manufacturer fails to supply adequate warnings about the risks of using the product (such as side effects from pharmacy prescriptions) or if they fail to supply ...
Equity theory stems from Social Exchange Theory. [4] It proposes that individuals who perceive themselves as either under-rewarded or over-rewarded will experience distress, and that this distress leads to efforts to restore equity within the relationship. [5]
Provision(s) may refer to: Provision (accounting), a term for liability in accounting; Provision (contracting), a term for a procurement condition; Provision, an album by Scritti Politti; A term for the distribution, storing and/or rationing of supplies, typically food or drink: Ground provisions, root vegetables used in Caribbean cuisine