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can any one explain the meaning of provision and contingent liability in laymans language pls and what is the differnce between of both of them pls any.... one help
Answers (7)
Provision is a liability of uncertain amount , which can be measured reliably fot using a substantial degree of estimation.On the other hand , a Contingent liability is a possible obligation that may or may not crystallize depending on the occurrence or non-occurence of one or more uncertain future events.
Aditya Birla
Provision is a liability of uncertain amount , which can be measured reliably fot using a substantial degree of estimation.On the other hand , a Contingent liability is a possible obligation that may or may not crystallize depending on the occurrence or non-occurence of one or more uncertain future events.
can you send the image of difference for provision and contingent liability
Thread Starter
Bala Chandarcan you send the image of difference for provision and contingent liability
Example of contingent liability.. RiL Ltd is fighting a case against HuL Ltd in court if RiL lose the case they should pay 5cr to HUL...here the 5cr of liability is contingent it may or may not be a liability for the company depends on the court we should not show this in BOA but only as a notes to accout
Thread Starter
Bala Chandarcan you send the image of difference for provision and contingent liability
in laymen language provision means jo tum assume krke chaltey ho ki in future tumhe itna loss ho jaeyga. for example: tumahri ek t-shirt ki shop h or tumne na kc t-shirt credit pr sale kr rkhi h pr ab tumhe lgta h ki unme se kc log syd pese na de to tum pehle se hi assume krke chlte ho ki tumhara ye loss ho skta h to tum kc pesa set aside kr lete ho ....... whereas contingent liability will depend on certain circumstances.....for example: tumhara ek frnd h tumne usko building rehne ke liye bss yu hi de rkhi thi ab vo kya krta h kbja kr leta h us pr or tum jakr kr case file kr dete ho.....ab yha ye to certain nhi h na ki tum hi case jeet jaoge....kya pta uska layer ache nikal jaye ya anything (means not certain) to yani us past ke event pr tumhari liability future me court ke order ane pr create ho jaye.....to ye contingent liability hogi
