Provisions
IAS 37 establishes the definition of a provision as a "liability of uncertain timing or amount", and requires that all the following conditions be fulfilled before a provision can be recognized:
- the entity currently has a liability as a result of a past event;
- an outflow of resources is likely to be needed to settle the liability; and
- the amount of the obligation can be estimated reliably.[4]
The standard also details measurement methods for provisions, generally requiring that the entity recognises a best estimate of the amounts needed to settle the obligation.[5]
