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Chapter 11

Upon recognition of a provision there must be an estimate of the potential cost of the
uncertain event and immediate recognition in the financial statements. This is
achieved with the following accounting entries:

Debit Expenses

Credit Provision

The provision will need to be classed as either a current or non-current liability.
Provisions should be reviewed at each statement of financial position date and
adjusted to reflect current best estimate.

Tutor notes guidance – discussion points

Take students through Illustration 1 from Chapter 12 of the Study Text.

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