Is provision a Long-Term Liability
Is provision a Long-Term Liability: It is a liability that is recognize when there is a probable obligation or liability that may result from a past event, and the amount of the obligation can be estimate with reasonable accuracy.
Provisions can be either short-term or long-term depending on the time frame for which the obligation is expect to be settle.
For example, a provisions for warranty expenses is usually a short-term liabilities because the warranty period is generally limit to a few months or a year. On the other hand, a provisions for environmental cleanup costs may be a long-term liability because the obligation may not be settle for several years or even decades.
Therefore, the classification of a provisions as a short-term or long-term liability depends on the nature of the obligation and the time frame for which it is expect to be settle.
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