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| Topic: |
Business
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| Number of pages / Number of words: |
6 / 1484 |
Essay's paper body
When it is probable that a transfer of economic benefits will be required to settle the obligation;
3. When a reliable estimate can be made of the amount of the obligation.
The amount acknowledged as a provision should be the best possible estimate of the expenditure required to settle the obligation at the balance sheet date...
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For example, a manufacturer gives warranties to customers at the time of a sale. The warranty states that if there are any manufacturing defects that arise within four years from the date of sale the product, the product is liable for repair or replacement. With past experience it is probable that there will be some claims under the warranties...
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