Product Recall-Warranty Provision

I think this is right but maybe Sir John will correct me! The provision is a way of setting aside profits for an anticipated liability which we know will occur but we are not able to assess with absolute accuracy. Imagine the Toyota company before the first of their recent recalls. They MAY have had a provision on there balance sheet but could not have anticipated the first of there recalls. That recall cost them a lot of money and they would not have had enough provision set aside to cover that cost. So double entry would have simply been Dr Recall Expense, Cr Cash. Then at the end of the year, if there was still further expense anticipated for that first recall, they would have guestimated how much should be provided and they would have caried that amount forward as a provision on the balance sheet. The DIFFERENCE between that figure carried forward and the anount brought forward would have been debited to the profit and loss account (assuming it was an increase in the provision) But oh, disaster! A second recall which also could not have been anticiparted. Again, the double entry to record the costs of this second (and the rest of the first) would have been recorded as Dr Recall expenses and Cr Cash Then, at the end of the year, the directors would sit down and say “How much more are we likely going to have to pay for the rest of that first recall, and now also the rest of the second recall?” So again they will guestimate the amount of the liability for those two recalls which have not yet been sorted out and the carry forward estimate of remaining liability will appear on the balance sheet with just the INCREASE / CHANGE in the amount carried forward compared with the amount brought forward will be debited to the profit and loss account. And then what happens? They have a third recall, so the process is repeated
As I said I think thats correct but maybe Sir johnmoffat will correct me