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Two forms of estimated liabilities (IAS 37)
-Provisions (liabilities which are uncertain in timing or amount)
-Contingent Liabilites (possible obligation where either the amount cannot be reliably measured or the outflow is not probable)
A Provision would be recorded as a normal liability however it would be measured at the Present Value of the best estimate required to settle the obligation
(also requires substantial note disclosure) Note: Will result in defered tax!
A Contingent liability will result in only note disclosure- and thus will have no effect on the quantintative aspect of the financial statments.
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