Page 185 - FAC4861_3 Unisa Test 4 slides

PROVISIONS, CONTINGENT LIABILITIES AND ASSETS

Legal obligations

• This category of obligations means that another party

has the right to summons the entity to perform.

• Such obligations are applicable, for example, when

warranties are given to customers, when such result

from litigation and when self-insurance is applied, and

in the case of onerous contracts.

• The essential element in such cases is therefore an

obligation that can be enforced by law.

185