Provisions are an issue regarding both law and economics. They are a complex balance sheet and tax category. They have an estimative nature and as a result they cause problems to managership. Therefore, they are usually created in far too small range. Provisions charateristics are by uncertainty of to the amount of the liability and the day of its payment. Provisions are a tool of risk management. They protect a business entity against fallout of risks and ensure the continuation of economic activity. Their task is to show a true and fair view of unit’s assets and financial situation. The aim of this article is to present the importance of the provisions. What is more a description of the mechanism of provisioning and their releasing will be presented. The article will also perform tax analysis of provisions.
Nov 18, 2020