The measurement of provisions requires the best estimate of the expenditure required to settle the present obligation
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The measurement of provisions requires the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. Where the effect of the time value of money is material, a present value shall be calculated using a discount rate. Using examples, explain how a liability-specific discount rate could cause the amount calculated for a provision to be lower when the risk associated with that provision is high.
How could this problem be averted in practice?
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Related Book For
Financial Reporting
ISBN: 9780730396413
4th Edition
Authors: Janice Loftus, Ken Leo, Sorin Daniliuc, Belinda Luke, Hong Nee Ang, Mike Bradbury, Dean Hanlon, Noel Boys, Karyn Byrnes
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