Provision questions – Insurance

Dear Mike,

From you answers regarding Provision questions put by Kengara:
It’s not acceptable to make provisions unless the amount involved is reliably measurable and an estimate of $400,000 does not satisfy that requirement.
therefore that charge to the Administrative Expense Account (with the credit going to the provision account) should not have happened
When we paid out $250,000, that should have been:
Dr Administrative expense $250,000
Cr Cash $250,000
Instead, what we have done originally was:
Dr Administrative expenses $400,000
Cr Provision $400,000
So, to correct, we need to remove that remaining $150,000 from the provision account and take it out of Administrative expenses too
The adjustment is therefore:
Dr Provision $150,000 (and that gets rid of that!)
Cr Administrative expenses $150,000 (and that gets rid of that extra amount that was debited to Administrative expenses.

Would it be right to assume if ever we are accounting for any insurance, due to it’s nature it cannot be reliably measured and is an estimate, therefore does not satisfy that requirement for setting up a provision.

We should always charge to an Expense account instead?

Many thanks Mike