A provision shall be recognised when:
- an entity has a present obligation (legal or constructive) as a result of a past event;
- it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
- a reliable estimate can be made of the amount of the obligation.
If these conditions are not met, no provision shall be recognised.
An entity shall not recognise a contingent liability.
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|Where, as a result of past events, there may be an outflow of resources embodying future economic benefits in settlement of: (a) a present obligation; or (b) a possible obligation whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.|
|There is a present obligation that probably requires an outflow of resources.||There is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.||There is a possible obligation or a present obligation where the likelihood of an outflow of resources is remote.|
|A provision is recognised (paragraph 14)||No provision is recognised (paragraph 27)||No provision is recognised (paragraph 27).|
|Disclosures are required for the provision (paragraphs 84 and 85).||Disclosures are required for the contingent liability (paragraph 86).||No disclosure is required (paragraph 86).|