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MikeLittle.
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yushanshan
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Hi sir,
I have trouble understanding the reason why the two conditions belong to provision as followed.
1 A company is leasing an office building for which it has no further use. However , it is tied into the lease for another year.
2 A company is closing down a division . The Board has prepared detailed closure plans which have been communicated to customers and employees.
MikeLittle
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In the first case, the company has a definite obligation – no question! So need to provide for a further year’s rent UNLESS there is a very good chance that the company may be able to sub-let
There is a definite obligation – they have announced the closure and raised in the minds of those affected the valid expectation that the closure will go ahead
yushanshan
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