RUECKSTELLUNGEN / PROVISIONS

Provisions can result in a higher or lower than expected income or lower than expected loss. One must be careful not to overstate an event that has not occured but may be likely.

eg.

• Bad debts
• Guarantees
• Losses
• Pension
• Severence Costs
• Restructuring Costs
• Employees not taking Holiday Time
• Damage to Property
• Liability Costs

*If income taxes were not calculatable, one could create a provision account, however, they can be calculated with reasonable accuracy, therefore, it is setup as a liability instead.