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AP has following legal action outstanding
A legal action claiming compensation of $500000 filed against AP in March 20X4. It is more likely than not that amount claimed will have to be paid
How should AP report it in financial statement for Y/E 31 march 20X5?
Correct ans is Provision
Sir here one thing I want to ask that , here reliable estimate of 500000 has been made + there are probable chances. But 1 thing I want to ask that here is it a present obligation OR is it a possible obligation?
More likely than not is probable and not possible, hence the provision.
Thanks
Sir but here one thing I want to ask that , here reliable estimate of 500000 has been made + there are probable chances. But 1 thing I want to ask that here is it a present obligation OR is it a possible obligation?
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