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Hi Sir in the Kaplan textbook there is a question Picklette. And i don’t understand why warranty provision is under NCL in the sofp.
And i also don’t understand why income liability is under Current liabilities as it was already subtracted in the income statement
Can you please help me with that Sir, Thank you
Hi,
I’ve not got the question to hand but the provision is likely a non-current liability as it is not settled until more than 12 months after the reporting date.
I can only presume that the amount deducted from the income statement (profit or loss) is from revenue as the amount is in relation to deferred income, i.e. funds received but which should not be recognised until the following year. The amount on the SFP will be the deferred income balance which will be released next year, i.e. within 12 months and so will be a current liability.
Hope that helps.
Thanks
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