Accounting and tax treatment of reservation

Abstract

At the end of the reporting period, when preparing financial statements, it is necessary to pay attention to whether the financial statements include all expenses of the accounting period. Provisions are recognized as an expense in the period only when their recognition in the current period meets certain requirements prescribed by accounting standards. The use of provisions is usually recorded by forming a liability to the supplier, employee and other persons by directly reducing the provision, is the cost is recorded in the Income Statement. IAS 37 Reservation, Contingent Liabilities and Contingent Assets defines a provision as a liability with an uncertain maturity or an uncertain amount, and a liability is a present obligation of an entity based on past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. represent economic benefits from the business entity. We must emphasize that provisions are also defined by other standards - for example, IAS 19 - Employee Benefits, which defines provisions for benefits and other employee benefits. However, in this paper, the author deals with the tax and accounting treatment of certain provisions that appear in practice, such as: reservation for severance pay, reservation for costs in the warranty period, reservation for awards and other benefits, reservation for litigation costs, etc.