Spike co began operating a new mine in Jan 20x3 under a 5 year government licence which required spike co to landscape the area after mining ceased at an estimated cost of $100000
As per IAS 37 is provision required in financial statements for year ended 31 dec 20x4?
Sir the above statement is true but one 1 thing 1 want to ask that,
for provision to be created there should be present obligation + reliavle estimate + probable chances of outflow
Sir here, there is a present obligation, reliable estimate of $100000 has also been made , but how we can say that there are probable chances of outflow in this question?
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Spike co MCQ
We are operating under a government licence that tells us that we need to landscape the area, so we are definitely going to have to do this, thus making it probable.
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