What's the difference between a provision and a liability? From: Management Accounting (British) | Date: July 1, 1998| Author: | COPYRIGHT 1998 Chartered Institute of Management Accountants (CIMA). This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group.Copyright information

The ASB suggests that provisions can be defined as a subdivision of liabilities, because it is an obligation which may not have to be met. This is a major change to accounting procedure because provisions will only be acknowledged when it is demonstrated that a company has an obligation because of an event in the past. An intention is not recognised as enough to warrant recompense. The new policy is designed to overcome abuses which have occurred in the past.

What makes a provision different from a liability? According to the ASB, nothing.

In FRED14 Provisions and Contingencies, the ...

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