Are provisions current liabilities?

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Let’s say that a company wants to create a provision for returns of faulty goods. Is it a current or a non current liability and how can it calculate the provision?

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score 0 · Answer 1 · 2012-12-02T18:24:34+00:00

Not necessarily! A provision is essentially a liability that the company expects to be realized some time in the future. It can be in within twelve months (a current liability) but it can also be after more than twelve months (non current liability).