Financial Accounting and Reporting



Oct 2, 2021
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Yes, if you had analyzed that the particular future event is probable to occur and materialize.

For example, you have sold stocks of a new product launch to Distributors and legally required to take back the stocks in the event the product launch is not successful and there is a probability this can occur, based on past trends. Another example, you rent an office and at the end of the lease you are required to reinstate the office to its original condition upon expiry of the lease. Another example could be a dispute with a third party and there is a probability the third party will win a settlement, although this has not happened as yet.

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