When can a provision be recognized as per ICDS X.

Manual - ICDS X : Provisions, Contingent Liabilities & Contingent Assets

Taxpayer can recognize a provision in the following situations:

• Taxpayer has a present obligation as a result of past event
• It is reasonably certain that an outflow of resources embodying economic benefits would be required to settle such obligation and
• a reliable estimate can be made of this obligation amount.

A provision should not be recognized for costs that need to be incurred to operate in the future.

Dated: 2-9-2017