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IAS 37 PROVISION

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › IAS 37 PROVISION

  • This topic has 1 reply, 2 voices, and was last updated 5 years ago by Stephen Widberg.
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  • May 12, 2020 at 12:43 pm #570624
    gayathree1234
    Member
    • Topics: 40
    • Replies: 1
    • ☆

    Hi Sir,

    there is a clause in a lease agreement.It states “internal condition of the property should be identical to that at the outset of the lease.” The lessee made some improvement to the property.The company recognises provision on the dismantling of the property since there is a present obligation (the clause).Is the obligation constructive or legal?

    Provision is recognised on the repairs too because the lease agreement states the landlord can recharge these costs to the lessee. I read in my lecture notes that Provisions for repairs & maintance is not allowed.Why the company recognised the provision?

    Thank you 🙂

    May 12, 2020 at 4:06 pm #570648
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    Dismantling – legal obligation – recognise at start of lease and discount

    Repairs – make provision if you cause damage and are legally required to repair it

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