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Sir if the restructuring provision cost is incorrectly then how this overstated expense and understand profit ?
The D/E for setting up ANY provision – i.e. to recognise a liability – is:
Dr Expense (e.g. wages and salaries)
Cr Provision (e.g. for redundancy settlementIf a provision has been recognised that should not have been recognised – e.g. it is not “de facto” a liability at the reporting date – expense is overstated – and hence profit understated.
The correcting journal will be to “write-back” the provision:
Dr Provision
Cr Expense
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