The accounting and fiscal treatment of provisions

Abstract

This paper treats the issue of establishment.by entities of litigation provisions, customer guarantees, restructuring, taxes or other provisions. The reason we have chosen as a subject of debate the constitution of provisions, results in the importance that they have in the activity of the economic entity. The purpose of our research is to demonstrate, from the perspective of practice, the importance of calculating and recording in the accounting of provisions under national and international law. The provisioning should take into account the principle of prudence, according to which "depreciation is recognized, regardless of whether the result of the financial year is loss or profit. Registration of impairment adjustments or loss of value is perform on the expense account regardless of their impact on the profit and loss account ". JEL: M 41, M 48