Jaurvot had provided 70,000 at 31 December 2025 for a commercial dispute. In February 2026, before authorisation, the dispute is settled for 95,000. The expense will be deductible when paid and the deferred tax asset is recoverable at a rate of 25 % (case data). Calculate the additional provision and the net effect on 2025 profit.
- Provision recognised
- 70,000
- Settlement amount
- 95,000
- Tax rate
- 25 %