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Hi Mike,
could you please help me to understand the recognition of a provision, specially the next two type:
– present obligation
– past event
This is a pretty abstract for me, and I cannot easily understand this two qualification of provision.
Thank you.
As a result of something that has already happened (a past event) the entity is now faced with an obligation – the unavoidable position where, to settle that obligation the entity WILL have to accept an outflow of economic resource (cash or other asset)
So, as a result of some past event, the entity is facing today (ie at present) an obligation
Is that better?
Ok, Thank you.
Could you please give me example where these excluding each other? I mean event where I have past event but no future present and vice versa.
Thank you a lot.
A past event is Serena Williams being knocked out of the singles and doubles tennis Olympic competition in Rio
There is no resultant present obligation
A person who enters a contract NOW, this instant – there was no history related to entering into this contract but, from the moment of signing it, there is now a present obligation and that present obligation, when viewed from tomorrow’s perspective, has arisen as a result of a past event (today’s contract signing)
OK?
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