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Chapter 15

1.4 Measurement

Provisions should be measured at the best estimate of the expenditure required to
settle the obligation as at the reporting date.

The best estimate of a provision will be:

 for a single obligation: the most likely amount payable

 for a large population of items: an expected value.

If the effect of the time value of money is material, then the provision should be
discounted to present value.

Illustrations and further practice

See illustrations 1 and 2 in Chapter 15.

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